Australia gives preliminary approval to Virgin-Etihad deal

SYDNEY — Australia’s competition regulator on Thursday gave interim approval for budget airline Virgin Blue to enter a code-sharing deal with Abu Dhabi’s Etihad, despite objections from flagship carrier Qantas.

By (AFP)

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Published: Thu 23 Sep 2010, 10:35 AM

Last updated: Mon 6 Apr 2015, 5:17 PM

The Australian Competition and Consumer Commission (ACCC) said the preliminary green light would allow the airlines to prepare for the alliance and market it to travellers ahead of the final ruling.

“The ACCC may review its decision on interim authorisation at any time,” the watchdog said.

“The ACCC’s decision in relation to interim authorisation should not be taken to be indicative of whether or not final authorisation will be granted.”

The proposed tie-up would see Virgin’s V Australia international long-haul offshoot enter a code-sharing arrangement including coordinated pricing and scheduling with Etihad.

Qantas, Australia’s national carrier, this month spoke out against the deal, fearing it would lead to “more widespread price coordination across the broad codeshare network”, including on routes between Australia and Europe.

But ACCC chairman Graeme Samuel said Virgin Blue and Etihad did not operate competing services and interim approval was appropriate because of the lengthy lead time needed for marketing and selling tickets.

“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,” the ACCC said.

“However, Virgin Blue and Etihad have put in place route protection plans to manage the travel arrangements of any affected passengers.”

The regulator recently said it would likely reject a proposed tie-up between Virgin and Air New Zealand, prompting Virgin founder Richard Branson to warn the carrier may stop flying its unprofitable trans-Tasman route.

Unlike that matter, the ACCC said it “notes that Virgin Blue currently does not operate any competing services with Etihad”.

Submissions on the Virgin-Etihad deal closed on Wednesday, and the ACCC has not indicated when it will hand down its final ruling.

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