John Durie: ACCC rejects Virgin’s Alliance Aviation FIFO bid

The ACCC has rejected Virgin’s request for clearance to continue a five-year agreement with Alliance Aviation to jointly bid for fly-in fly-out (FIFO) contracts throughout the country.

The decision on Friday is a draft but is also a pointer to the proposed December 1 decision on whether Qantas can buy the 80% of Alliance it doesn’t already own.

The Virgin agreement was based on public interest benefits in combining the Alliance regional routes with the mainland carrier.

It argued the miners wanted to link the regional and national routes and in particular on the east coast.

ACCC draft ruling

But the ACCC found the joint venture only bid for flights on the west coast and the big customers like BHP and RIO didn’t demand national links on the FIFO deals.

The ACCC said there appeared to be no public benefits to an agreement that would effectively reduce the number of carriers on the routes from three to two.

“At this stage, the ACCC is not satisfied that the public benefits likely to result from the Charter Alliance Agreement in the next five years will outweigh the public detriment that is likely to result from VARA and Alliance Airlines coordinating their FIFO services,” ACCC deputy chair Mick Keogh said.

Impact for Qantas

If Qantas buys the rest of Alliance this will also reduce the number of carriers from three to two.

Virgin has lobbied against the Qantas-Alliance deal arguing while the regional market was open the FIFO routes were linked to the main trunk lines where there were only two carriers in Qantas and Virgin.

The ACCC is due to decide on the Qantas takeover on December 1.

The Virgin deal is subject to further comment by November 4 before a final ruling.