VIRGIN PLANS GROUNDED AGAIN

Written on the 4 October 2010

VIRGIN PLANS GROUNDED AGAIN

VIRGIN Blue Limited (VBA) is struggling to get off the runway with international partnerships, as the Australian Competition and Consumer Commission (ACCC) denies the airline’s proposed alliance with Air New Zealand.

The announcement is the second in as many days that looks set to cause delays for Virgin’s resource sharing plans with international carriers.

It follows comments yesterday by US regulators that Virgin and Delta’s plans to cooperate on routes, revenue management, pricing, schedules and capacity would not be exempt from US anti-trust laws.

ACCC chairman Graeme Samuel says Virgin’s similar plan with Air New Zealand would be anti-competitive in the market for trans-Tasman flights, issuing a draft legislation to deny authorisation of the alliance.

“The ACCC believes that Virgin Blue is a significant competitor to Air New Zealand and there are a number of trans-Tasman routes where the alliance raises competition concerns,” he says.

“These routes account for around one quarter of passenger traffic in the trans-Tasman market. This means that more than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand.”

The ACCC has been busy this week, rejecting National Australia Bank’s bid for AXA for the second time.

Virgin Blue CEO John Borghetti was unavailable for comment.

VBA shares fell 9.3 per cent this morning to $0.39, after falling 3.34 per cent yesterday on the US decision.


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