Australia's ACCC approves Virgin’s Skywest takeover bid

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Australia's competition regulator has cleared Virgin Australia's proposed takeover of Perth-based regional carrier Skywest Airlines.

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims says the takeover is "unlikely to lead to a substantial lessening in competition in any relevant market" as the two carriers only has overlapping services on the Perth-Broome route.

Skywest operates regional services within Western Australia under its own brand, and also operates 10 ATR 72 turboprops for Virgin Australia under a wet lease agreement. It has a large presence in the resource charter market, operating services on behalf of major mining companies.

"The message that we received from the market was broadly supportive of the proposed acquisition," adds Sims. "The services that Virgin and Skywest supply are seen as largely complementary, rather than competitive with each other."

Under the proposed takeover, Skywest would remain as a separate subsidiary with its own air operator's certificate, but would operate under the Virgin brand.

"This acquisition will enable us to accelerate our expansion in the high growth fly-in fly-out and regional markets, increasing competition in these important segments and bringing new benefits to customers," says Virgin chief executive John Borghetti.

The takeover is still subject to more conditions, including approval from Singapore's High Court, Australia's Foreign Investment Review Board and Skywest shareholders.

Virgin announced the proposed cash and shares offer for Skywest in October last year.

Virgin also awaits the ACCC's approval for its joint venture proposal with Tiger Airways, which would see it take a 60% stake in Tiger Airways Australia. An announcement on that ruling is due on 7 February.