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Canberra goes in to bat for Virgin-Delta alliance

written by australianaviation.com.au | October 20, 2010
photo - James Morgan

The Australian government has written to the US Department of Transport (DOT) in support of the proposed joint venture alliance between Virgin Blue and Delta Air Lines.

According to weekend reports carried by Fairfax newspapers, the Department of Infrastructure and Transport has urged the US DOT to grant the two carriers antitrust immunity, particularly given that the Australia-US route operates under an ‘open skies’ arrangement with low barriers to entry. The letter says that in such circumstances it was “extremely rare for such approvals not to be granted”, particularly when Delta and Virgin Blue have “a minor share” of the market.

“Approval … would see these two currently independent carriers better able to compete with the established alliances, facilitating long term, sustainable competition,” it also said.

The unusual step by the DOT comes as Delta and Virgin Blue fight to gain US antitrust immunity for their proposed joint venture. Although it has been approved by the Australian Competition and Consumer Commission, in August the DOT advised that it was likely that it would not grant antitrust immunity after it found that the alliance would not be in the public interest. The two carriers are now actively trying to turn around the interim decision, which is seen as particularly critical for Virgin Blue as part of its ‘go forward’ strategy, a large part of which involves feeding alliance hubs at Los Angeles and Abu Dhabi.

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