The Australian Competition and Consumer Commission (ACCC) has issued a draft determination which would block Virgin Blue’s proposed alliance with Air New Zealand on trans-Tasman services.
“The ACCC believes that Virgin Blue is a significant competitor to Air New Zealand and there are a number of trans-Tasman routes where the alliance raises competition concerns,” ACCC chairman Graeme Samuel said in a media statement. “These routes account for around one quarter of passenger traffic in the trans-Tasman market. This means that more than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand.”
The ACCC has now invited interested parties to make applications to support the claims of increased public benefit brought by Virgin Blue and Air New Zealand, while the two airlines have indicated that they intend to respond as part of that process.
The draft determination comes only one day after Virgin appeared to suffer another defeat with the US Department of Transportation issuing a notice that it intends not to grant antitrust immunity for its proposed wide-ranging joint venture agreement with Delta Air Lines. Should both applications end up being denied, it would prove a major challenge for Virgin CEO John Borghetti, who appears to be building up a strategy to work with strong alliance partners on its international services.
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