ACCC authorisation for Virgin Australia to sell and market Air New Zealand’s trans-Tasman services

ACCC

The ACCC has granted authorisation to allow unilateral code sharing arrangements between Virgin Australia and Air New Zealand that will boost travellers’ fare choices on trans-Tasman routes.

Following the ACCC’s draft determination to grant authorisation in May, the ACCC received a small number of submissions most of which supported the unilateral code sharing arrangements.

Virgin Australia can now place its airline code on trans-Tasman routes operated by Air New Zealand, which are sold in Australia and originate in Australia (VA coded trans-Tasman services). The codeshare rights are provided on the condition that Air New Zealand specifies the fares which Virgin Australia may market and resupply those itineraries.

“We are satisfied that the sharing of resources by these airlines will provide consumers with more ticketing and price options on trans-Tasman routes,” ACCC Deputy Chair Mick Keogh said.

“Virgin Australia and Air New Zealand will also be able to jointly offer discounts and a range of marketing options to businesses, and eligible Virgin Australia customers will have access to Velocity Frequent Flyer program benefits and international lounge access.”

The code sharing arrangements do not apply to routes where Virgin Australia is currently, or decides to start, operating its own services in competition with Air New Zealand.

“We consider that these conditions significantly limit the potential for the code sharing arrangements to lead to anti-competitive behaviour,” Mr Keogh said.

Further details about the application and submissions are available on the ACCC’s public register here.

Background

Virgin Australia currently operates Australian domestic and short-haul international flight services. The six international destinations to which Virgin Australia currently operates are: Queenstown, New Zealand; Tokyo (Haneda), Japan; Nadi, Fiji; Denpasar (Bali), Indonesia; Port Vila, Vanuatu; and Apia, Samoa. Virgin Australia currently has non-reciprocal codeshare arrangements with several partner airlines that operate long-haul international air passenger services to/from Australia.

These arrangements allow Virgin Australia to place its code on long haul international services operated by the partner airline. The partner airlines specify the fares at which Virgin Australia may market and resupply these services to customers in Australia. Virgin Australia’s Partner Carriers currently include Qatar Airways, United Airlines, Singapore Airlines, Hawaiian Airlines, All Nippon Airline and Air Canada.

Air New Zealand is New Zealand’s national flag carrier. In addition to its operations on the trans-Tasman, Air New Zealand currently operates services to several destinations in the Pacific, Asia and North America.

Air New Zealand is currently in an airline alliance with United Airlines, Cathay Pacific and Star Alliance involving 26 international airlines.

Note

ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act (CCA).

Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct would be likely to outweigh any public detriment.

/Public Release. View in full here.