ACCC TO DRIVE A WEDGE IN AIRLINE PARTNERSHIP

A MAJOR pending partnership between national airlines is under fire, as the Australian Competition and Consumer Commission (ACCC) proposes to deny its authorisation.

The partnership in question, between Virgin Australia Airlines, Virgin Australia Regional Airlines (VARA) and Alliance Aviation Services (ASX: AQZ), proposes to give the airlines an edge when it comes to fly-in-fly-out (FIFO) air services.

Under the agreement, Virgin and Alliance would seek to jointly bid for, and contract with, corporate charter FIFO customers.

According to ACCC Commissioner Sarah Court, if Virgin and Alliance were given the green light to pursue this partnership, it would curtail the competition in Western Australia without providing justified benefits.

"The charter alliance will largely eliminate competition between VARA and Alliance Airlines in providing FIFO services to corporate customers in Western Australia," says Court.

"The ACCC considers that the likely public benefits will not outweight the significant public detriment likely to result from VARA and Alliance Airlines coordinating their FIFO services in Western Australia.

"Therefore, the ACCC's preliminary view is that this alliance is likely to materially reduce competition."

Alliance and Virgin responded to the ACCC stating that the companies would review the watchdog's concerns and provide additional support for the partnership.

In their response, Alliance and Virgin remained adamant that the proposed partnership would "support competition and create substantial public benefits".

VARA operates its charter services from a base at Perth airport, while Alliance maintains a national charter network.

As such, the ACCC has determined there is a significant overlap between the airlines when it comes to charter flight services in Western Australia.

The ACCC is currently compiling its draft determination on the matter, and is seeking feedback particularly from FIFO customers before January 27.