Alliance Should Benefit Tasman Travellers

TransTasman travellers should benefit from better schedules, more competitive pricing and increased direct routes between regional centres following the Virgin Blue-Air New Zealand alliance.

The Australian Competition and Consumer Commission has given conditional approval to Virgin Blue teaming with Air New Zealand and the Middle Eastern airline Etihad.

After indicating three months ago that it would block the deal, the ACCC has now allowed Virgin Blue and Air New Zealand to form an alliance on the trans-Tasman route for three years – two years less than the airlines had sought.

“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.”

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.

The alliance still needs the okay from across the Tasman but New Zealand’s transport minister, Steven Joyce, is also expected to give his approval to the trans-Tasman deal within days.

The regulator also gave interim approval to a proposed alliance with Etihad for flights between Australia and Abu Dhabi. It is regarded as strategically important because it gives Virgin Blue access to Europe, one of two markets crucial to boosting its appeal to lucrative corporate travellers.

But Virgin Blue will have to wait until early next year to hear whether US regulators will also reverse their opposition to a planned alliance with Delta Air Lines for flights between Australia and the US.

Virgin Blue’s chief executive, John Borghetti, said the deal gave Virgin Blue a ”greater reach” within New Zealand and would help it stem the losses on the Tasman routes.