Delta Air Lines Inc. (NYSE:DAL) and Australia's Virgin Blue Airlines Group received
a three-year approval from the Australian Competition and Consumer Commission for a joint venture where they will coordinate operations between the U.S. and Australia, including on pricing, revenue management, schedules, capacity and routes flown.
ACCC chairman Graeme Samuel said in a statement, "The entry of Virgin Blue and Delta on the trans-Pacific routes has created strong competition on price and service in the market for passenger transport. The ACCC expects that this would continue to be the case under the new arrangements to the benefit of consumers."
Samuel also said the JV will allow Virgin Blue and Delta to compete more effectively against the incumbents on the routes, Qantas Airways Ltd. and UAL Corp.'s (NASDAQ:UAUA) United Airlines Inc. In July, The Deal's transportation reporter Lou Whiteman noted
reasons the deal would be approved, including that Delta is a newcomer to the route and likely needs the local feed and connections from Australia if it is to remain competitive against more established players like United and Qantas, a partner of American Airlines Inc. (NYSE:AMR) in the U.S.
The ACCC notes that its three-year approval hangs on the conduct of the parties under the JV. The Sydney Morning Herald says
analysts think the revenue-sharing agreement could bring an end to heavy discounting of fares, bring the number of carriers down to three from four.
The deal also requires approval from the U.S. Department of Transportation. Virgin Blue's V Australia, a long-haul international airline, was
launched in February and has since
added service between Brisbane and Los Angeles, and Sydney and Los Angeles. -
Baz Hiralal
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