Collusion on landing fees: Virgin

[Wirraway]

Sat "Weekend Australian"

Collusion on landing fees: Virgin
Richard Gluyas, National business correspondent
November 27, 2004

VIRGIN Blue has accused Qantas and Sydney Airport of colluding to damage its business by changing the way landing charges are levied at the nation's busiest airport.

The low-cost carrier claims Sydney Airport's decision to charge landing fees according to the number of passengers on board unfairly penalises Virgin Blue because its planes carry more passengers on average than Qantas.

Virgin made its allegations at an October hearing in the Australian Competition Tribunal in Sydney.

Qantas and Sydney Airport strongly rejected the allegations yesterday.

Virgin claims the change in landing fees in July last year has contributed substantially to a rise of 115 per cent in airport charges over the past 18 months.

The tribunal's presiding member, judge Alan Goldberg, asked at one point in the tribunal hearing if the evidence showed Sydney Airport had acted "in conjunction or with a tacit understanding of Qantas to bring in a charge which would be anti-competitive or anti-Virgin".

Counsel for Virgin Blue, Stephen Gageler SC, said: "Your Honour, the answer is yes."

The Trade Practices Act outlaws any agreement or understanding to substantially lessen competition.

Sydney Airport told the tribunal the allegations were "of the utmost seriousness".

Australian Competition and Consumer Commission chief Graeme Samuel told The Weekend Australian that the ACCC had been represented in the hearing.

Asked if he was personally aware of the allegations, Mr Samuel said he was. He refused to comment on whether the ACCC planned to take action.

A Qantas spokesman said yesterday the airline "completely rejected" Virgin Blue's allegation.

A Sydney Airport spokeswoman said: "We categorically deny the allegations or insinuations."

Ironically, Virgin Blue and Qantas are on the same side in the tribunal case, where the airlines have appealed against a federal government decision not to "declare" Sydney Airport's facilities under the Trade Practices Act.

If the tribunal agrees with the airlines, Sydney Airport will effectively surrender its power to set prices to the ACCC.

Qantas and Sydney Airport strongly objected when the allegations were first raised in the tribunal.

Counsel for Sydney Airport, Richard Douglas SC, said: "The idea that we engaged in a conspiracy with Qantas to disadvantage Virgin Blue is something which has never been raised in this inquiry and, in our respectful submission, ought not to be permitted to be raised."

Virgin Blue head of strategy and communications David Huttner would not comment on the allegations of anti-competitive behaviour.

"We believe we have presented a very solid case in the tribunal, and we will await its ruling," he said.

Virgin Blue chief executive Brett Godfrey has upped the ante for more than a week on airport charges, saying Sydney Airport regarded lifting charges as "its God-given right as an unchecked monopolist".

Mr Huttner said Virgin Blue had to pass on the higher charges to the public.

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[Sunfish]

Funny thing that. Everyone and anyone who has had a go at Qantas in the last twenty years has met with a sticky end that has nothing to do with its ability to fly planes. Why am I not surprised?

Bad things happen to companies or individuals that get in Qantas's way. The compasses ran into terminal troubles in Sydney. Ansett got raped and pillaged while the government looked the other way. Rex is in trouble with Sydney Airport, which is run by the former head of the PM's department and owned by Macquarie Bank, the most ruthless bunch of liars and thieves in Australia. Now Virgin is getting shafted.

Max the Axe knows the PM. The Packer press owns the PM. Jamie is on the Board of Qantas. All very incestuous and typical Sydney. I just wonder where Greaeme Richardson and Trevor Kennedy fit in?

All the more reason to find out who is Qantas's secret large shareholder?

[omalley]

Oh dear let's shed a tear for poor little VB.

Let's face it it's just another excuse for VB management to blame evryone but themselves for their own incompetence.

VB wanted punctuality stats to be published because they thought that they were the best. Let's face it they were good at it whilst they had spare aircraft to prop up their operation. Now where are they?

Perhaps all the companies that you metioned are just not as good at playing the game as QF is!

Business is about survival of the fittest (smartest). It's a dog eat dog environment.

Perhaps VB needs to look at it's talent pool, instead of crying about everybody else!

[HGW]

omalley, you have not grasped the sentiment of VB's argument which I must say is nothing to do with published OTP figures.

It is about a monolopy charging whatever they like and the possible collusion between it,s biggest customer and it's self. This has happened before in big business by way of cartels, etc and could be a possibility here.

All the failed airlines in the past could not have been all poorly run. The ultimate price is paid by the traveller, you and I. If you don't see that or think that is okay then good luck to you.

[Capt Claret]

HGW wouldn't a cartel be between businesses in a similar business? Such as different airport operators. Qantas & Sydney Airport might both be in aviation but their businesses are quite different.

(please note that my accounting/business studies amounts to vague memories from about 4th form @ school :\ )

[Going Boeing]

Sunfish

I recall pointing out to you on another thread when you accused QF of having a hand in the demise of Compass that Qantas did not have any domestic operation until almost a year after the Hawke/Abeles pulled the AOC of Compass Mark 1. It's obvious to everyone else that it was Abeles pulling the strings in that case.

If you take shots at people or companies, at least get the facts first.

[HGW]

Capt Claret, you are right about the cartel thing. I was using that as an example of what can and does happen in business.
It can be seen that QF could benefit by changing the airport fees to a different system. Being the largest customer of the airport they have a lot of sway with the airport authority. All of this can be done it backroom meetings and would be attacking your competitors by stealth.
Not fact, just theory.

[Sunfish]

I'm sorry but cartels can and do operate between dissimilar industries. In fact the birth of anti trust legislation in the 1920's (or was it 30's?) in the U.S. was over a secret deal between Standard Oil and the railways.

The railways raised the price of transporting oil to the point where Standard Oil's competitors went broke and were acquired by Standard Oil. Litigation and finally legislation ensued when it was discovered that the railways had been secretly rebating the increased fees back to Standard Oil.

Knowing the sort of games that the Sydney filfth like, I wouldn't be at all surprised if Virgin Blue wasn't "in play". Seems that every hand is raised against VB isn't it?

[The_Cutest_of_Borg]

Knowing the sort of games that the Sydney filfth like

Sunfish... opinions are like a%$@oles, everyone has one, but I think I speak for a lot people here when I say you flogging a tired, dated and possibly deceased nag here. Give it a rest.