ACCC Okays Virgin-Delta Joint Venture Deal

Submitted by Jim Thesiger on 11 December, 2009 - 12:54

Australian Competition and Consumer Commission gave Virgin Blue (VBA) the approval to go for operating the Pacific route through a joint venture with US based Airline giant Delta Airways. The decision came from ACCC after the plan got approval from the US Department of Transportation last month allowing the two airlines to sign a joint services agreement. However, the partnership is still to get the final approval from the US based regulator which depends on the setting up of uniform fares and charges along with sharing passengers of the carriers. The Virgin Blue and Delta Airways are expecting to get the clearance from the US regulator as a partnership which is immune from antitrust laws. It is to be mentioned that this law involves high penalties for companies who will be found guilty of price fixing without getting the proper authorisation.

Both the Airlines have claimed that in order to compete against other giants like Qantas and US based United Airlines, Delta and Virgin has to work together. Virgin Blue also claimed that this partnership will help the company to recover from the huge loss that it faced due to its long haul start-up V Australia since it established the trans-Pacific operations this year. According to the chairman of ACCC Graeme Samuel, the join venture among V Australia and Delta may benefit the travelers by providing a better competition in the pacific route. In the ruling Mr. Samuel also added that, the regulator expects both the airlines to provide their services in exchange of a lower fare in each other's domestic networks. The deal would provide Delta with the incentive that it will be allowed to promote the sales which will be generated through the joint venture by reducing the expense of any US domestic leg of a V Australia ticket.

Mr. Samuel said that ACCC expects to see the consumers getting benefited from cost savings which the join venture will provide. It is to be mentioned that previously the regulator rejected a same kind of proposal presented by Air Canada and Air New Zealand. In support of its decision regarding the Virgin-Delta joint venture, ACCC stated that the deal would allow the two recent entrants to compete more effectively against United and Qantas in the trans-pacific zone.