ACCC Approves Virgin Australia Delta Alliance Extension

5th Jun 2015

Virgin Australia and U.S. carrier Delta Air Lines received a green light from the Australian Competition and Consumer Commission (ACCC) to continue their joint venture alliance on trans-Pacific routes for the next five years.

ACCC: "Alliance Would be Beneficial for Customers"

The ACCC's draft decision says it has given interim authorization to the two airlines to continue their partnership, as it would be of value to travelers.

In a statement this Thursday, ACCC Commissioner Jill Walker said:

"The ACCC accepts that this combined network is likely to be valued by travellers between Australia and the US, since the majority of such passengers connect from and/or to destinations behind and beyond the key gateway points. This is reflected in the growing number of passengers utilizing such connecting services."

Walker also added:

"The ACCC considers that the alliance has resulted in enhanced products and services including increased and better online connections, access to each other's frequencies, better schedule spread, loyalty program benefits, and improved lounge access."

Another reason for approving this alliance, ACCC said, was that it will give both Virgin Australia and Delta Air Lines a better chance to compete against Qantas and United on routes between Australia and United States.

Virgin Australia and Delta Air Lines Have a 35% Market Share of the Sydney-LA Route

Right now, Virgin and Delta have a 35 per cent market share on the Sydney-Los Angeles route. According to ACCC, this route also has the largest number of competitors and the highest demand.

John Borghetti, chief executive at Virgin, acknowledged the Australian regulator's decision in the following statement:

"We are committed to working with our partner Delta to boost tourism and continue to bring strong competition to trans-Pacific travel."

In January, the two carriers applied with the ACCC for a 10-year authorization of their partnership. This would include mutual code sharing, price, schedules and routes coordination, reciprocal frequent flyer benefits and share revenue under the "metal neutrality" concept.

Delta Air Lines President Ed Bastian said in March that the immediate goal of this partnership was consolidation of current routes between Australia and US, rather than adding new ones.

Submissions for ACCC's draft decision are due by 26th June 2015.