The ACCC has granted interim authorisation for a proposed codeshare pricing arrangement between Virgin Australia and United Airlines.
Currently Virgin Australia operates domestic services and limited short-haul international services and United Airlines operates long-haul services between Australia and the United States and beyond.
Under the proposed codeshare, Virgin Australia and United Airlines would be able to put their code on passenger flight services operated by the other, extending each other’s networks across both sides of the Pacific.
Interim authorisation allows United Airlines to set the fares at which Virgin Australia may sell the services operated by United Airlines, whether those services are sold as a standalone itinerary or as part of an itinerary that includes flight segments operated by Virgin Australia.
“The ACCC’s preliminary view is that this proposed codeshare arrangement with United Airlines is likely to result in a public benefit as it will help Virgin Australia re-establish its international network. Currently, it appears that Virgin Australia is unlikely to be able to operate its own long-haul international services in the short term,” ACCC Commissioner Stephen Ridgeway said.
“These arrangements are not likely to lessen competition as there is no operational overlap on any routes between Virgin Australia and United Airlines and there are other airlines operating on the routes.”
Having granted interim authorisation, the ACCC is seeking feedback on the substantive application for authorisation which covers Virgin Australia’s proposed codeshare pricing arrangements with other partner carriers. More information, including a copy of the decision and details on how to make a submission, is available at Virgin Australia Airlines Pty Ltd.
Background
Virgin Australia commenced operations in Australia in 2000. It currently operates a network of domestic flight services and short-haul international flight services between Australia and Nada, Fiji, with flights to Bali, Indonesia set to recommence from June 2022.
It does not currently operate any long-haul international services and is unlikely to do so in the short to medium term, as it does not have access to the widebody aircraft necessary to begin operating such services.
United Airlines currently operates daily flight services on the Sydney-Los Angeles route and the Sydney-San Francisco route and plans to re-commence its service on the
Melbourne-San Francisco route in June 2022. United Airlines has an extensive network of routes within the USA and beyond, including to Mexico, the Caribbean and South America.
Virgin Australia has sought authorisation to enter into similar codeshare pricing arrangements with a range of other international carriers.
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).
Section 91 of the CCA allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.
The ACCC may review a decision on interim authorisation at any time, including in response to feedback raised following interim authorisation.
Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
