ACCC backflips on Virgin-Alliance FIFO partnership

The Australian Competition and Consumer Commission (ACCC) has decided to approve the Charter Alliance agreement between Virgin Australia and Alliance Aviation Services to provide fly-in fly-out (FIFO) services in Western Australia, after it was initially rejected due to competition concerns.

Virgin Australia Airlines, Virgin Australia Regional Airlines (VARA) and Alliance Aviation Services had proposed to jointly bid for and contract with corporate charter customers for FIFO services in WA.

However the ACCC had initially rejected this proposal, arguing that it would reduce the number of major FIFO service providers in Western Australia from four to three, and that Qantas and Virgin/Alliance airlines would dominate the majority of FIFO services.

The ACCC has now authorised the Charter Alliance after it determined that the public benefits outweighed the consequences of the companies providing FIFO services in WA.

ACCC commissioner Roger Featherston highlighted benefits such as more efficiencies through integrating the VARA and Alliance Airlines Perth operating bases, greater flexibility in the use of aircrafts by combining their fleets and more product and service offerings.

The parties involved also agreed to collaborate on a range of other aspects including airport handling, aircraft maintenance, check-in and frequent flyer programs.

“The operational synergies which are likely to result from the Charter Alliance and bringing together VARA and Alliance Airlines’ complementary networks should reduce their costs and allow them to make more competitive offers to customers,” Featherston said.

He added that many of the larger FIFO customers have “strong bargaining power” when negotiating with FIFO operators and will still have other alternatives such as Qantas and Cobham.

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