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Virgin carriers given interim authorisation to deepen ties

The Australian competition watchdog has given Virgin Australia the interim go-ahead to co-operate with Virgin Atlantic on flights between Australia and the UK and Ireland, via Hong Kong and Los Angeles.

The Australian Competition and Consumer Commission (ACCC) says the proposed co-ordination is not anti-competitive.

“We do not think this enhanced co-operation is likely to lessen competition on the routes between Australia and the British Isles,” says ACCC commissioner Sarah Court.

The ACCC awarded interim approval on the grounds of a “new public benefit”, even as it saw “no particular urgency to the co-ordination beyond the applicants’ profitability and load factors.”

The Virgin carriers had applied for interim authorisation on the grounds that Virgin Australia will “suffer potential detriment” if any delays for co-operation took place. Virgin Australia cited its small market share of less than 10% and relatively lower load factors of around 66% on the Hong Kong route.

In June, Virgin Australia filed an application with the ACCC, seeking authorisation that would allow the two carriers to jointly set prices, control inventory and co-ordinate schedules and network planning on routes between Australia and the UK and Ireland.

Both airlines are also looking to align their products, as well as jointly procure ground services and corporate contracts.

The interim authorisation will hold as the commission examines the application in greater detail. A draft determination is due in September, ACCC adds, with a final determination by November.

Cirium schedules data shows that Virgin Australia flies daily from Sydney and Melbourne to Hong Kong,.Virgin Atlantic, meanwhile, flies daily Hong Kong-London Heathrow. Each carrier codeshares on the other's services between Hong Kong.

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