Virgin Atlantic is seeking to deepen its ties to Virgin Australia, as the two airlines have applied to the Australian Competition and Consumer Commission for cooperation on services. The partnership aims to cooperate on services between Australia and the UK and Ireland, using mutual mid-points in Los Angeles and Hong Kong, with a decision expected by November 2019.
Virgin Australia and Virgin Atlantic are looking to work more closely in the future. The two airlines have applied to the Australian Competition and Consumer Commission for a tie up that will see them sharing prices, coordinating schedules and even sharing airport operations.
According to Flight Global, Virgin Australia stand to benefit from a tie up, particularly on the Hong Kong route. The airline has been struggling to make an impact between Australia and Hong Kong, achieving a load factor of just 66% and a market share of just 10%. The application to the ACCC stated,
"The proposed co-operation is anticipated to result in increased passenger numbers on these services and will improve their performance. From a competition and passenger perspective, and in the interests of Virgin Australia’s network offer, it is in the public interest to take steps to improve the sustainability of these routes."
Virgin Australia recently issued a profit warning, telling investors they could be down $100m AUD, leading the airline to seek to make cuts, including delaying the delivery of their Boeing 737 MAX.
What’s happening?
The two carriers, although similarly named, are separate entities. Backed by Richard Branson, they operate as separate airlines, although they have been codesharing for many years. They deepened their codesharing partnership in 2018, as reported by The Points Guy, which gave travelers a more seamless way to connect between the UK and Australia on all-Virgin aircraft, if they so wished.
At the time, the move was speculated to be in response to the newly launched Qantas service connecting Perth to London nonstop. Now, it seems they want an even closer working relationship, perhaps to give them a stronger footing on the Kangaroo route prior to the start of Project Sunrise.
According to CAPA, the two airlines have applied to the Australian Competition and Consumer Commission for:
- Joint pricing, inventory management, scheduling coordination, network planning and marketing on services using the UK / Ireland route
- Cooperation on product alignment, airport operations, procurement and tenders for contracts
What this essentially means is that the two airlines will effectively operate as one business. For passengers, there will be a seamless experience from Australia to the UK or Ireland and vice versa. From ticketing to branding, cabin experiences to airport services, it will seem as if they are flying one single carrier instead of two codeshared airlines.
Submissions invited
Virgin Australia and Virgin Atlantic will need to gain approval of the Australian Competition and Consumer Commission before they are allowed to go ahead with any of their plans. They have sought what is known as ‘interim authorization’ from the Commission, which is due to be decided upon in July 2019.
Prior to that, submissions from interested parties either in support or in opposition of the proposal are being invited. Public consultation officially started on the 7th June and will close in relation to the interim authorization on 21st June. In regards to substantive authorization, there is a closing date for submissions of the 28th June.
Following this, and if the interim authorization is given, there will be an opportunity for the airlines to respond to any issues raised during the consultation. By September, the ACCC should have produced a draft determination, which will be consulted upon until October, with final determination planned for November.
Do you think closer cooperation between the two Virgin airlines is a good thing? Let us know in the comments.