The Australian Competition and Consumer Commission (ACCC) has opposed a regional partnership between Virgin Australia and Alliance Aviation Services as it means two operators would dominate fly-in, fly-out (FIFO) services in Western Australia.
Virgin and Alliance Aviation are proposing they jointly bid for and contract with corporate charter customers for FIFO services. This partnership would also involve integrating certain aspects of their FIFO operations, including aircraft maintenance and airport handling.
According to the ACCC, the proposed charter alliance would reduce the number of major FIFO service providers in Western Australia from four to three, with Qantas and Cobram Aviation Services joining the strategic partners.
Additionally, the ACCC believes the strategic partnership would mean just two suppliers – Qantas and Virgin/Alliance Airlines – would be competing for the majority of FIFO services.
ACCC commissioner Sarah Court said the charter alliance would largely eliminate competition between VARA (Virgin) and Alliance Airlines in providing FIFO services in Western Australia.
“The ACCC considers that the likely public benefits will not outweigh the significant public detriment likely to result from VARA (Virgin) and Alliance Airlines coordinating their FIFO services in Western Australia,” Court said.
“Therefore, the ACCC’s preliminary view is that this alliance is likely to materially reduce competition for the supply of FIFO services in Western Australia.”
The ACCC did accept that the alliance would likely result in some public benefits, including operating efficiencies by integrating their Perth operating bases, increased flexibility and optimisation of aircraft by combining their fleets.
“However, given the ACCC’s conclusion that the charter alliance is likely to lessen competition for FIFO services in Western Australia, it is unlikely that the benefit of these efficiencies will be substantially passed through to corporate customers in Western Australia,” the ACCC stated.
The ACCC is seeking submissions on the draft findings by January 27.