The airline landscape in Australia is set for a major re-set with the consumer watchdog proposing to grant authorisation to Virgin Australia and Qatar Airways which will allow them to engage in co-operative conduct under an integrated alliance for five years.
Virgin Australia and Qatar Airways are seeking authorisation to engage in an integrated alliance where Virgin Australia, in partnership with Qatar Airways, will commence 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne.
Under the proposed arrangements, Virgin Australia would use Qatar Airways’ aircraft and crew to operate the new services. This is known in the aviation industry as ‘wet lease’ arrangements.
The ACCC said today that it considers that the proposed co-operative conduct is likely to result in public benefits and is unlikely to result in any public detriment.
Which will likely infuriate Virgin competitor Qantas.
"We consider that the proposed co-operative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits for consumers,” ACCC Commissioner Anna Brakey said.
The new air services are subject to final regulatory approvals by the ACCC and other government bodies.
The ACCC is now seeking feedback on this draft determination before it makes a final decision.
The ACCC granted interim authorisation to Virgin Australia and Qatar Airways on November 29 to enable them to commence marketing and selling the new Australia-Doha services.
When granting interim authorisation, the ACCC accepted a court-enforceable undertaking from both airlines which ensures that if any of the necessary final regulatory approvals are not granted, then customers who have booked the proposed new services will be given the option of a refund or re-accommodation on a suitable alternative flight at no additional charge and would be compensated for any reasonably foreseeable costs.
A number of interested parties have since raised concerns with the ACCC that the proposed co-operative conduct would circumvent Australian workforce laws and regulations, and that the lack of time limits on the use of Qatar-based crew to operate the new services will have negative implications for the Australian aviation workforce.
“We consider that Virgin Australia is unlikely to commence operating long-haul international services between Australia and the Middle East on a stand-alone basis in the next five years,” Brakey said.
“In those circumstances, we do not consider that there is likely to be a material detrimental impact on the Australian aviation workforce as a result of the conduct.”
Under the proposed arrangements Velocity Frequent Flyer members will continue to be able to earn and redeem Velocity points on Singapore Airlines operated services globally, including to and from Europe, the Middle East and Africa.
Virgin Australia’s arrangements with South African Airways and Virgin Atlantic would be unchanged.
The ACCC is seeking submissions in response to the draft determination by March 7 before making its final determination.
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