- The consumer watchdog rejects an application for re-authorisation from Virgin Airlines and Alliance Aviation (AQZ) to continue supplying collaborative services to corporate fly-in and fly-out (FIFO) clients
- The ACCC says the alliance did not deliver the extent of public benefits foreshadowed when it first authorised the arrangements in 2017
- ACCC Chair Gina Cass-Gottlieb says if the Alliance-Virgin partnership continues, there will only be one other large provider of charter services for FIFO workers
- The ACCC has told the airlines they can lodge a new application for an additional transition period to unwind the charter alliance if they believed it would provide public benefits
- Alliance Aviation shares are up 1.32 per cent and trading at $3.07 at 1:28 pm AEST
The ACCC has denied an application for re-authorisation from Virgin Airlines and Alliance Aviation Services (AQZ) to continue supplying collaborative services to corporate fly-in and fly-out (FIFO) clients.
The consumer watchdog said the partnership between the airlines had not delivered the extent of public benefits foreshadowed when the ACCC authorised the arrangements back in 2017.
According to the ACCC, the charter alliance has resulted in some public benefits through
greater operational flexibility and cost savings, although it was not satisfied that the public benefits outweighed the public detriments.
“The airlines have not demonstrated to us that there’s a sufficient public benefit to outweigh the likely detriment from their proposed coordination, so we have decided not to re-authorise the conduct,” ACCC Chair Gina Cass-Gottlieb said.
“We’re concerned that continuing the charter alliance is likely to reduce the number of bidders in tender processes for charter services.”
She said the application involved the second and third largest providers of FIFO airline services jointly tendering and coordinating their service — meaning there would only be one other large provider of these services in the ring.
While there was some support for the alliance, the watchdog said a larger number of customers did not place significant value on having a combined charter and regular transport service offering from Virgin and Alliance.
The ACCC told Virgin and Alliance that if they believed there were public benefits in
seeking an additional transitional period of authorisation to enable them to unwind the
charter alliance, they could lodge a new application.
In October 2022, a draft proposal to deny the airline application was issued by the ACCC, which prompted Virgin and Alliance to request conditional authorisation for up to five years if it had not met the consumers’ requirements.
The ACCC denied this request and has since issued interim authorisation to allow the airlines to only continue to fulfil their existing charter alliance contracts for a short period.
“The agreement to not compete for each other’s customers, while not always implemented to date, is also likely to reduce competition and incentives for the airlines to invest and innovate,” Ms Cass-Gottlieb said.
Alliance Aviation shares were up 1.32 per cent and trading at $3.07 at 1:28 pm AEST.
