While Qantas has argued that its international operations are too weak to survive without Emirates, Virgin Australia is claiming that Qantas’s strength means the proposed alliance will undermine competition.
In a submission to the ACCC, Virgin has urged the consumer watchdog to deny Qantas’s application for interim approval of the alliance, saying the tie-up would “give rise to anti-competitive detriment.”
“The reality is that Qantas remains the dominant carrier for travel to and from, and within, Australia,” it said. “Virgin Australia considers that, by combining the strength and market penetration of Qantas and Emirates, the proposed conduct will make it more difficult for competitors to challenge Qantas’s existing position, not only for international travel, but within domestic Australia.
“There can be no question that there will be an impact on competition,” Virgin said.
In its own filing with the ACCC, Qantas has argued that a rejection of the proposed 10-year deal with Emirates would leave it unable to compete internationally and forced to rely on a “virtual network” that would be against the national interest. Qantas lost about $450 million on its international operations last year and said it would likely be forced to cut services even to London should the Emirates alliance be denied.
As proposed, the alliance would see Qantas sever its code-sharing arrangement with British Airways and reroute its twice daily services to London through Dubai. The alliance is scheduled to kick off in April, with Qantas seeking interim approval now in order to begin commercial planning.
But Virgin, which operates its own alliance with Emirates-rival Etihad, argued that such interim approval has only been granted in the past in cases where there was little commercial overlap between the two proposed partners.
The tie up with Emirates “raised a number of complex issues across many markets, including ones in which the applicants have a very large combined market share,” Virgin said. “Given this, Virgin Australia considers that the full six-month assessment period is required in order to assess the effects of the proposed conduct.”