VB/ANZ alliance approved
THE Australian Competition and Consumer Commission (ACCC) has conditionally approved a tie-up between Virgin Blue and Air New Zealand on their trans-Tasman routes.
The approval will apply for three years to the airlines coordinating a range of issues including pricing, revenue management, schedules, capacity and routes flown.
"The ACCC considers that the Alliance is likely to benefit passengers in a number of ways including more choice of routes and frequencies, and potentially lower fares as a result of cost savings and efficiency improvements," said ACCC chairman Graeme Samuel in a statement.
"The ACCC is still concerned that the Alliance may affect competition on a number of routes between Australia and New Zealand, particularly routes involving Wellington," Mr Samuel said.
"However, the ACCC has imposed a number of conditions on authorisation which are designed to address these competition concerns."
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The conditions require the airlines to maintain and increase the number of seats flown on the routes where the ACCC has identified competition issues.
The conditions are intended to restrict the ability of the Alliance to raise fares on these routes by limiting its capacity, the ACCC said.
The ACCC's approval of the tie-up follows an earlier, draft determination which proposed to reject the alliance.
"Since then, the ACCC has received a substantial amount of information from the applicants and interested parties about the likely public benefits and detriments," the ACCC said in its statment.
"The ACCC is now satisfied that the identified public benefits, in combination with the conditions of authorisation, are likely to be sufficient to outweigh any public detriment arising from the alliance."
Air NZ and Virgin Blue had sought approval for five years.
"Given the significant role of the authorisation conditions in the balance of benefits and detriments, the ACCC considers it appropriate to review developments earlier," the ACCC said.
"As such, the ACCC has granted authorisation until December 31, 2013."
The ACCC said the approval provided immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.
Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.