Australia’s competition regulator set to reject alliance between Virgin Blue, Air New Zealand

Friday, September 10, 2010

Regulator opposes Virgin Blue, Air NZ alliance

SYDNEY — Australia’s competition regulator on Friday gave a thumbs down to a proposed airline alliance on flights between Australia and New Zealand.

The Australian Competition and Consumer Commission’s preliminary decision said a link between Virgin Blue and Air New Zealand was likely to reduce competition in the market.

The commission said interested parties have until Sept. 24 to respond to the draft ruling. The decision comes a day after the U.S. Transportation Department tentatively denied Virgin Blue’s proposed joint-venture partnership with Delta Air Lines on flights between the United States and Australia.

ACCC chairman Graham Samuel said there were a number of Australia-New Zealand routes where the alliance raised competition concerns.

“These routes account for around one-quarter of passenger traffic in the trans-Tasman market,” Samuel said in the statement, referring to the Tasman Sea separating Australia and New Zealand.

“This means that more than 1 million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand.”

The statement said the alliance would benefit the public with cost-saving and more efficient travel, but said it had doubts about the magnitude of the benefits.

Virgin Blue and Air New Zealand released statements saying they would respond to the ACCC’s concerns within the allotted time period.

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