The ACCC has authorised a joint venture between Virgin Blue Group (Virgin) and Delta Air Lines, Inc. (Delta) in relation to flights between Australia and the USA. The joint venture consists of agreements to coordinate:
- schedules, capacity and routes flown
- passenger sales and marketing activities
- pricing and revenue management
- enhancement of frequent flyer and lounge program offerings, and
- purchasing and procurement.
Although this joint venture is similar to a previous proposal by Air New Zealand and Air Canada (which was rejected by the ACCC), the ACCC granted this authorisation on the basis of its view that the venture was unlikely to result in any significant lessening of competition, and would result in net benefit to the public.
Both Virgin and Delta only recently commenced providing non-stop services between Australia and the USA. The only other airlines offering direct flights on that route are Qantas and United Airlines, both of which are well-established operators on the trans-Pacific route.
The ACCC considered that the joint venture is likely to result in a number of public benefits, because it:
- would enable both airlines to compete more vigorously with the incumbent carriers, for example by providing a larger network of connections, more efficient routings between destinations and the introduction of new routes
- would enable both airlines to access ‘behind-gateway traffic’, facilitating the more efficient and effective integration of each airline’s trans-Pacific services with existing domestic networks, including streamlined ticketing and baggage handling, and
- is unlikely to affect Virgin’s historical approach of offering innovative and highly competitive services.
Also, given the existing level of competition in the market, the ACCC considered it likely that any cost savings achieved by the airlines would be passed on to consumers in the form of reduced ticket prices.