Alliance Between Virgin Australia-Air New Zealand Gets 3Year Approval Instead of 5

Virgin Australia’s alliance with Air New Zealand, in connection with its trans-Tasman routes, has been given another three years approval by the Australian Competition and Consumer Commission (ACCC).

The two airlines, however, have been requesting for a five year approval, but the ACCC rejected this on the grounds of a
“dynamic nature in the aviation industry”. The companies have also failed to have some conditions dropped from their requests, such as in the limitation of a number of flights on its other routes.

The regulator said that it has give the approval because these domestic networks provide “material public benefits by allowing the airlines to link”. According to the ACCC commissioner Jill Walker, “Combining the networks of the two airlines allows them to offer enhanced products and services, such as new frequencies and increased access to loyalty-program benefits and lounges. This in turn is likely to promote competition on trans-Tasman routes.”

The ACCC believes that without the alliance, these airlines’ operations would be at a disadvantage against its rivals, especially since Qantas and Emirates have also come up with their own tie-ups.

Concern, however, is being given to the Melbourne-Christchurch and Sydney-Dunedin routes, which the ACCC believes will affect industry operations, which is why conditions regarding capacity has been limited to just eight routes.

“The ACCC notes that the weighing up of likely public benefit and detriment was finely balanced, and it was only with the proposed conditions that the ACCC reached the preliminary view that the alliance is likely to result in a net public benefit.”