Virgin Australia & Alliance Airlines

Summary

On 27 May 2022, the ACCC received an application for authorisation from Virgin Australia Regional Airlines Pty Ltd (VARA), Virgin Australia Airlines Pty Ltd (Virgin Australia), Alliance Airlines Pty Limited and Alliance Aviation Services Limited (Alliance Airlines) (together, the Applicants) to enter into, and give effect to, an extension of their Charter Alliance Agreement which provides for the joint tender and supply of services to corporate customers, principally for fly-in fly-out employees.

Under application AA1000615, the Applicants are seeking authorisation to continue to give effect to the Charter Alliance Agreement, in place since 2017, which enables the Applicants to:

  1. Jointly bid for, and contract with, corporate customers, including:

a.     joint pricing and scheduling of services for those customers

b.     agreeing not to compete for each other’s specified pre-existing customers

c.     agreeing for new charter opportunities, to cooperate and coordinate to bid jointly for the charter opportunity. Individual bids are permitted if a joint bid is not made.

  1. Agree not to supply services to each other’s key competitors, with some limited exceptions.
  2. Offer eligible passengers of those customers access to the Velocity frequent flyer program.
  3. Offer eligible passengers of those customers access to Virgin Australia’s airport lounges as part of an integrated corporate offering.
  4. Cooperate in relation to check-in, airport operations, airport handling, service policies and other matters to improve the overall quality of service offered to corporate customers, and
  5. Jointly optimise operations, including procurement and deployment of aircraft engines and spare parts, and maintenance and ground-handling services, to achieve cost savings and efficiencies.

The Applicant’s note that despite the restriction described in 1(b) above, the Charter Alliance has cooperated in relation to certain pre-existing customers from time to time.  Further, the exclusivity provision described in (2) has not prevented Alliance supplying services, including wet lease services, to other airlines.  

The Applicants seek authorisation for five years.

On 8 June 2022, the ACCC granted interim authorisation to the Applicants to enter into, and give effect to, an extension of the Charter Alliance Agreement.

On 21 October 2022, the ACCC issued a draft determination proposing to deny authorisation. A copy of the draft determination is available below.

On 2 November 2022, the ACCC decided to extend the deadline by which a final decision must be made in this matter by six months, with the agreement of the Applicants – although the ACCC expects to be able to make a final determination in March 2023. This has also enabled the ACCC to provide a longer period for interested parties to make submissions.

The closing date for submissions in response to the draft determination is now 25 November 2022.

An indicative timetable for the ACCC’s assessment is set out below:

Indicative date

Stage in assessment process

27 May 2022

Lodgement of application and supporting submission.

8 June 2022

ACCC decision regarding interim authorisation and public consultation process begins.

29 June 2022

Closing date for submissions from interested parties on the substantive application and interim authorisation decision.

21 October 2022

Draft determination.

October/November 2022

Public consultation on draft determination including any conference if called.

25 November 2022

Closing date for submissions from interested parties on the draft determination.

9 December 2022

Closing date for Applicants to respond to submissions from interested parties.

March 2023

Final determination.

Applicant(s)

  • Virgin Australia Regional Airlines Pty Ltd
  • Alliance Aviation Services Limited
  • Virgin Australia Airlines Pty Ltd (Use for all Virgin Airline entries)
  • Alliance Airlines Pty Limited

Authorisation number(s)

  • AA1000615-1

Submissions - after draft decision

Document title Date