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Virgin Blue-Etihad alliance gains interim approval despite Qantas’ objections

Virgin Blue’s alliance with Etihad on flights between Australia and the Middle East has received interim approval by the ACCC despite objections from rival Qantas.

Virgin Blue EtihadEtihad’s alliance with Virgin Blue will see the two airlines cooperate on pricing and scheduling across both airline’s networks in Australia and the Middle East. In addition the Virgin Blue-Etihad alliance is expected to to deliver increased capacity between Australia and Etihad’s Middle Eastern hub in Abu Dhabi.

The ACCC’s interim authorisation to the Virgin Blue-Etihad deal will allow the airlines to make initial preparations and begin promoting the alliance’s flights to consumers now while the ACCC drafts up it’s final decision on the deal.

“In granting interim authorisation the ACCC has taken into account the fact that Virgin Blue and Etihad currently do not operate any competing services, as well as the lead time required to market and sell tickets before the commencement of long-haul services,” ACCC chairman Graeme Samuel said.

The ACCC is aware that consumers who book one of the new services during the period of interim authorisation are likely to be affected if final authorisation is denied. However, Virgin Blue and Etihad have put in place route protection plans to manage the travel arrangements of any affected passengers.

Virgin Blue rival Qantas has been heavily critical of the proposed deal between Virgin Blue and Etihad, with Virgin Blue accusing Qantas of hiding behind the ACCC.

“If Qantas’s position was to be adopted, it would simply have the self-serving result of delaying a pro-competitive initiative in which Virgin Blue, through V Australia, and Etihad Airways will provide increased competition to Qantas. Delaying the alliance would be to the detriment of passengers.” Virgin Blue’s submission read according to The Australian last week.

Virgin Blue’s planned alliance with Air New Zealand has been denied by the ACCC recently in respect of flights between Australia and New Zealand. However unlike the proposed Virgin Blue and Air New Zealand alliance, the ACCC understands that Virgin Blue does not currently compete directly with Etihad on routes between Australia and Abu Dhabi, as such the ACCC granted interim approval in this case.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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