Australia's competition czar, the Australian Competition and Consumer Commission (ACCC), has given interim approval for Virgin Australia's proposed codeshare pricing arrangement with United Airlines. The provisional approval allows Chicago-based United Airlines to set the fares at which Virgin Australia may sell the services operated by United Airlines, whether those services are sold as a standalone itinerary or as part of an itinerary that includes flight segments operated by Virgin Australia.

Interim pricing approval is a good sign

As a rule, the ACCC grants interim approval (or doesn't) before a final decision. In this case, that final decision should be made in July/August following a public consultation period. And while it's by no means a fait accompli, the fact that the ACCC has granted interim approval is an encouraging sign the Virgin Australia / United Airlines hookup will get the go-ahead later in the year.

Virgin Australia sprung a pre-Christmas surprise last December when it dumped its longstanding US partner airline, Delta, in favor of United Airlines. Delta has since signed an agreement with another Australian airline, Rex, to feed passenger traffic onto and take traffic off Delta's flights in Sydney. While Virgin Australia's proposed partnership with United contains many bells and whistles, the ACCC's interim decision okays the pricing provision of the broader partnership.

Virgin Australia needs authorization for its partner airline (in this case, United) to specify the fares at which Virgin Australia may market and resupply United's flights to consumers in Australia. The authorization would avoid suggestions of any resale price maintenance (a deal reached not to sell a product or service below a specific price point).

United Boeing 767-300
Photo: Vincenzo Pace/Simple Flying

United stays the course with Australia

Virgin Australia wants to sell seats on United metal via its own selling channels, tag those United flights with a Virgin Australia VA designator, and sell United flights as standalone products or in conjunction with Virgin Australia flights. A similar process is also underway to gain permission for the proposed partnership from US competition authorities.

While Virgin Australia no longer flies to the United States, United Airlines has stayed the course in Australia throughout the pandemic. It currently flies from Sydney to Los Angeles and San Francisco and will soon restart flights between Melbourne and San Francisco. Resumption of pre-pandemic Sydney - Houston, and Melbourne - Los Angeles flights are anticipated later this year. There is also some chatter United flights between Brisbane and San Francisco may follow due to the Virgin Australia partnership. However, long-haul aircraft shortages at United may scuttle that plan in the short-term - if there is any serious consideration of it underway at all.

Virgin Australia Tail
Virgin Australia no longer flies to the US and is unlikely to anytime soon. Photo: Andrew Curran/Simple Flying

“The ACCC’s preliminary view is that this proposed codeshare arrangement with United Airlines is likely to result in a public benefit as it will help Virgin Australia re-establish its international network. Currently, it appears that Virgin Australia is unlikely to be able to operate its own long-haul international services in the short term,” ACCC Commissioner Stephen Ridgeway said on Thursday.

“These arrangements are not likely to lessen competition as there is no operational overlap on any routes between Virgin Australia and United Airlines, and there are other airlines operating on the routes.”

United competes on the US - Australia country pair with Delta Air Lines and Qantas. Owing to aircraft shortages, American Airlines has paused its Sydney flights. Final approval from competition authorities in both countries will allow United Airlines and Virgin Australia to fly passengers from the other airline around their own networks.

Simple Flying has approached Virgin Australia for their response to Thursday's interim ACCC decision. We received no reply before the publication deadline.