VARA and Alliance Airlines Seek Approval for Charter Alliance from ACCC

23rd Sep 2016

In a proposal to the Australian Competition and Consumer Commission, Virgin Australia Regional Network (VARA) and Alliance Airlines said that by working together on charter flights, they could compete effectively against the biggest Australian airline Qantas.

In their application, the two airlines stated that they have complementary businesses. Both have a base in Perth, but Alliance Australia is also present on the east coast and in the central part of the country.

VARA and Alliance Say Charter Alliance will Help them Compete Better against Qantas

The application from VARA and Alliance Airlines said:

"Currently, Qantas is in a superior (and in part unique) position to provide a full suite of corporate-related services which include charter services, RPT (domestic and international) services and frequent flyer and lounge benefits, to corporate customers on the east coast and central Australia."

The application continued:

"Corporate customers have given both of the applicant's feedback during tender processes that Qantas is the only provider of the 'one-stop shop' on a national basis. In a situation where some customers are looking to package their national air services requirements in order to get a more competitive 'global' price offer from Qantas, the charter alliance will enable the applicants to match that integrated product offering and compete head to head with Qantas."

In their joint application VARA and Alliance Airlines also stated:

"This enhanced competitive position will increase overall competition for corporate charter customers, and particularly competition against Qantas, which is a substantial public benefit for Australian corporate customers. Corporate customers, particularly companies with a large FIFO workforce, view these ancillary benefits as highly desirable because the provision of a comprehensive frequent flyer program is a key employee benefit that can be used to attract a higher skilled workforce in a market where there is a shortage of suitable workers."

According to their application, VARA has a fleet of 14 Fokker 100s, as well as two Airbus A320 planes, all of them based at Perth Airport. On the other hand, Alliance has five Fokker 50s, eight Fokker 70s and 15 Fokker 100s. These are based in Melbourne, Perth, Brisbane, Adelaide, Auckland, Cairns and Townsville.

VARA and Alliance Airlines initially announced their plan for a charter services partnership in February this year and lodged the application with the ACCC at the end of August, after they penned a long-term agreement on the same month.