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Virgin says Qantas-Emirates deal will hurt competition

written by australianaviation.com.au | September 25, 2012
Virgin is opposing Qantas' proposed tie-up with Emirates. (John Absolon)

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.

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“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.

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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.”

 

 

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11 Comments

  • craig

    says:

    qantas always complains when virgin targets their markets eg australia to america this is where qantas prophet came from before virgins competition

  • Grumpyoldfart

    says:

    Bring on the Qantas Emirates deal, best news ever and looking forward to my next trip to LHR with Q&E. I also seem to recall that at one stage Virgin had a similar deal with Emirates, what happened to that in the end?

  • reverend

    says:

    Virgin was with Emirates originally and they scrapped them for sing air air nz and etihad. Emirates is larger than that. Sorry virgin you did the bad deal lie in it

  • Michael

    says:

    Ahhh Virgin never did a similar deal with emirates. They did a small code sharing deal

  • Peter

    says:

    Qantas wants Emirates while Virgin Australia already have Etihad…..Isn’t VA just being a bit hypocritical with the situation ?

  • air1

    says:

    suck it up virgin u have your alliance and now qantas has theres deal with it!

  • Dan

    says:

    These two Alliances for Qantas and Virgin should only improve quality of service and yet be competitive to each other. I think Virgin has a poor chance of winning at the ACCC but they had to put up some sort of defence.

    Cain’t wait to see how the big 2 players here will pan out in the next 5 yrs.

  • Ron

    says:

    I would have liked to have seen VA simply say “we wish QF all the very best & we’ll see them on the battlefield”, but like Dan said, they had to put up some sort of token defence. Their shareholders would not have been happy if they just laid there & took it without a whimper.

    VA split it’s domestic & international business, much to QF’s horror. Now QF is doing what it sees it needs to do. Whether it’s codesharing, equity partners or virtual mergers, both will do as they see fit to survive.

    All’s fair in love & business.

  • mariosbl

    says:

    I agree with Ron. But airlines can’t hide behind regulatory organisations and protectionism.
    It would be better for VA to look after their own business and how they are going to confront QF & EK.
    QF took the best decision ever. Wether this is good for competion , will see. For consumers this is going to be great! Look forward to try combined flights Q&E.

  • Chris

    says:

    The QF / EK deal is awful for anyone in PER / BNE / ADL who liked flying on a Qantas plane to Europe. Qantas have simply told us “thanks for the loyalty… Now go fly EK!” …

  • David

    says:

    The QF/EK deal will definitely drive up prices, it has to, shareholders for on will demand it. On a recent trip with EK SYD-AKL QF was double the EK price. Pretty smart for QF at least on this leg to demand EK reign in pricing after March next year. This is great for QF, not great or customers.

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