ACCC Approves Virgin Australia's Purchase of Skywest
26th Apr 2013
Virgin Australia's recent purchase of Skywest will strengthen its hold in the continent as the major air carrier that challenge's Qantas dominance in the domestic market via its regional subsidiaries. ACCC approved the purchase in late January this year following more than a year of the two airlines' partnership.
Skywest has long been a major player in the state of Western Australia and few other areas outside the state. Skywest will become Virgin Australia's regional airline to take on Qantas' regional wing QantasLink. The partnership between the two airlines began in early 2011 when both carriers signed a deal allowing 18 of the Skywest's turboprop planes to sport the colors of Virgin in some of its established routes.
In October of 2012, John Borghetti, Virgin Australia CEO, announced its intention to take over the operation of Skywest following its 10% stake purchase in April that same year.
He said that the purchase would enable Virgin to expand its network to cover the whole continent with Skywest's own regional network. He further said that the competition in one of the country's important markets will enable them to realize the full potential of their operations with the development of a more comprehensive network and further refine its service.
Virgin Australia has also been eying Tiger Airways Australia as its next target for stakes acquisition. If it is successful with its planned takeover of a 60% controlling stake of Tiger Australia, Virgin will have an even footing with Qantas in terms of airline subsidiaries serving domestic, regional and short-haul international routes.
As a result, Skywest will square off with QantasLink and Tiger will take on Jetstar.
Borghetti is willing to invest in Tiger Australia more than $62 million to increase its fleet by 200% until 2018. Tiger has a current fleet of 11 planes. He also assured the public that if he is successful with his acquisition plan of Tiger Australia, Virgin will allow Tiger to run its own business.
Shall Tiger become a part of Virgin family, it will not codeshare flights with its mother unit. He will allow Tiger to evolve independently as a true low-cost carrier, with its own brand of marketing and management styles.