“The ACCC considers that the joint venture is likely to assist Virgin Blue and Delta to compete more effectively against the incumbents on the routes, Qantas and United Airlines,” ACCC chairman Graeme Samuel said.
“The entry of Virgin Blue and Delta on the trans-Pacific routes has created strong competition on price and service in the market for passenger transport. The ACCC expects that this would continue to be the case under the new arrangements to the benefit of consumers,” Samuel added.
However, the ACCC noted that the outcomes for passengers will be dependent upon the airline’s conduct, and so it only proposes to grant authorisation for three years.
Under their proposed joint venture arrangement, Delta and Virgin Blue would coordinate their approaches on pricing, revenue management, schedules, product and capacity on services in the South Pacific. The deal is expected to deliver great benefit to both V Australia and Delta’s trans-Pacific services.
“This cooperation will allow the carriers to offer seamless, integrated travel between cities throughout the Australian and US domestic markets. This enhanced network-to-network product will enable the maintenance and expansion of existing trans-Pacific scheduling and the introduction of new direct trans-Pacific routes,” the airlines said in a joint statement welcoming the ACCC decision.
The draft determination is out for public comment until November 17 before it is finalised. The airlines are also awaiting a decision from the US Department of Transportation in order to proceed with the joint venture.