The Australian Competition and Consumer Commission (ACCC) has given Virgin Australia and Virgin Atlantic the green light for their proposed expansion into the British Isles according to Air Transport World.
The ACCC had previously granted the pair provisional approval on July 4th before issuing the draft approval yesterday, September 13th. The two airlines must now submit another round of submissions before October 4th, with a final decision to be made in November.
Allowing Virgin Australia and Virgin Atlantic to work together would benefit the public
In the draft approval issued yesterday, the ACCC determined that allowing the two airlines to cooperate more closely would only benefit the public. They said it would not harm competition on flights between Australia, Britain and Ireland.
ACCC Commissioner Stephen Ridgeway said in a statement released following the draft approval carried by website Australian Aviation:
“In authorizing this cooperation, we expect to see improvements to the carriers’ schedules and services to passengers.”
This new approval will now allow the two airlines to jointly manage marketing strategies, inventory, and pricing, things that were not previously allowed under their codeshare agreement.
The two airlines also said that they would now accept each other’s frequent flyer air miles and provide passengers with more benefits.
Virgin Australia needs the partnership to maintain flights to Hong Kong
In their application to the ACCC back in June, Virgin Australia suggested that forming a more meaningful relationship with Virgin Atlantic was necessary if it was to maintain direct flights between Australia and Hong Kong.
According to figures submitted by Virgin Australia, their routes to Hong Kong only had a load factor of around 66% with a market share of around 10%. These figures will have now declined due to the on-going public unrest in the former British colony that has seen both Cathay Pacific and Qantas cut back on the number of available seats.
Virgin Australia has been affected by the protests in Hong Kong and, as a result, has reduced the number of weekly flights to China’s special administrative region. Virgin Australia’s website shows that the previous daily flight between Melbourne and Hong Kong now only operates four times a week, with flights from Sydney being cut from daily to six times per week.
While announcing the airlines latest full-year results, Virgin Australia chief executive Paul Scurrah told investors the airlines was completing a full review of its network, fleet, and capacity following a seventh consecutive annual loss.
The interim authorization for the partnership granted by the ACCC in July allowed both airlines to begin implementing their partnership prior to final approval.
The main goal of the new partnership was to build on the existing codeshare agreement that had been in place since early last year. Virgin Atlantic placed its VS code on Virgin Australia flights from Australia to Los Angeles and Hong Kong as part of the deal. At the same time, Virgin Atlantic added the VA code for its flights between Los Angeles, Hong Kong, and London Heathrow.
Virgin Australia and Virgin Atlantic only have 3% of the market between Australia the British Isles
In the application, the two airlines cited a combined market share on flights between Australia, the UK, and Ireland at just 3%. This is minuscule when you consider that the Qantas/Emirates alliance controls 40% of the market.
On the Australia to the UK and Ireland route, Virgin Atlantic will become Virgin Australia’s third alliance partner. This is alongside Etihad, who flies to London via Abu Dhabi, and Singapore Airlines who flies through Singapore.
The last time Virgin Atlantic flew its aircraft from London to Australia was in 2014 when they had an Airbus A340-600 flying LHR-HKG-SYD. When Virgin Atlantic pulled out of Australia, it left British Airways as the sole European airline flying to Australia with its own planes.