18 August, 2015

Virgin and Delta crank up the competition

It’s a good day for Virgin’s US alliance, with the agreement with Delta set to stay in the air.

The Australian Competition and Consumer Commission has granted Virgin Australia and Delta Air Lines’ the authorisation to coordinate operations between Australia and the United States for a further five years.

The alliance allows Virgin and Delta to offer a single integrated network, which includes services between Australia and the US, and within the respective Aussie and US domestic networks.

“The ACCC accepts this integrated network will likely be valued by travellers between Australia and the US,” ACCC’s chairman Rod Sims said.

“Virgin and Delta operate return services between Sydney and Los Angeles, and Brisbane and Los Angeles, – travellers use these gateway points to then connect with other destinations. This is reflected in the growing number of passengers using such connecting services.”

“The alliance has also resulted in enhanced products and services including increased and better connections, access to each other’s flights and better schedule spread, loyalty program benefits and improved lounge access.”

The alliance allows Virgin and Delta to keep their competitive edge alive between the US and down under, with the combined market share of the two carriers on the key overlap route of Sydney to LA sitting around 37%.

The airlines were initially seeking reauthorisation for a 10 year stint, however the ACCC granted five years due to the ongoing changes in services on the trans-Pacific and the evolving nature of the aviation industry.

“Since the launch of the Alliance in 2009, Virgin Australia and Delta Air Lines have delivered choice and competition across the Pacific,” Virgin Australia’s ceo John Borghetti said.

“We welcome the ACCC’s assessment of the public benefit the alliance brings to both Australian and American travellers.”

Authorisation now guarantees immunity from court action that might otherwise threaten their competitiveness, with the ACCC satisfied that the public benefits from the conduct outweigh any public detriment.

The ACCC previously granted interim authorisation back in June, before extending the agreement that began back in December 2009.

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