Virgin Australia Opposes Grant of ACCC Interim Authorisation to Qantas-Emirates Deal
Virginia Australia is opposed to the agreement between flag carrier Qantas and Middle Eastern airline Emirates. It asked the Australian Competition and Consumer Commission (ACCC) to withhold the grant of an interim authorisation until the two airlines could prove their tie-up would benefit Australian consumer.
Virgin said the interim authorisation would result in a level of cooperation between Qantas and Emirates which is anti-competitive while the ACCC studies the main application.
Among the issues cited by Virgin in its eight-page submission to the ACCC was the very large combined market share of the two air carriers. Virgin said ACCC should assess the impact of the tie-up for six months.
Ironically, Virgin which is Australia's second-largest carrier, secured a regulatory approval from ACCC for its alliance with another Middle Eastern airline company, Etihad Airways.
Qantas justified its seeking an interim approval from ACCC due to landing slots at airports being allocated only two times a year. Australian investment bank Macquarie Bank estimated that the Qantas-Emirates deal would get 42 per cent market share of the Kangaroo route between Australia and the United Kingdom, and an even a larger part of the business class portion.
Qantas agreed to a tie-up with Emirates in a bid to improve its losing international operations. Qantas had warned that if ACCC would reject the deal, it would further cut its European operation which is already a losing proposition.
One casualty of the Qantas-Emirates tie-up is that the air carrier would close its first class lounge in Singapore. However, the Changi Airport would still offer a business lounge facility for Platinum and Gold frequent flyer members.
The decision to scrap the first class lounge is due to having no first class passengers bound to or from Singapore in its Sydney-London route which will have Dubai as its stopover beginning April 2013.
Qantas explained that the Singapore lounges are part of the Qantas-British joint venture that will be dissolved in March 2013 which would result in drastic reduction of travelers to Singapore.
