Virgin Australia has gained approval from the competition regulator for its alliance with aviation powerhouse Singapore Airlines.
The green light completes Virgin Australia chief executive John Borghetti’s mission to create a virtual international network, where the airline is able to offer customers hundreds of destinations around the world without spending millions of dollars on new aircraft.
The Australian Competition and Consumer Commission (ACCC) said today the two carriers would be permitted to cooperate on pricing, scheduling, marketing and sales on Australia-Singapore services and international and domestic connecting flights.
The ACCC had already issued draft approval for the partnership, in which the two airlines would also codeshare on each other’s flights, giving Virgin access to SIA’s network within Asia.
Similarly, SIA now had a domestic airline partner to feed passengers on its extensive operations out of Australia.
The authorisation was for five years.
“The ACCC considers that the alliance is likely to lead to increased competition for international air passenger services,” ACCC chairman Rod Sims said in a statement.
The ACCC said the alliance was unlikely to be significantly anti-competitive in any of the relevant markets.
The tie-up had already received the approval from the Competition Commission of Singapore.
Alliances with international airline partners have been a key plank in Mr Borghetti’s bid to capture a greater number of corporate travellers, a market segment dominated by Qantas.
Virgin, Australia’s number two carrier, already had regulatory approval for partnerships with Etihad Airways, Air New Zealand and Delta Air Lines.
The Singapore Airlines partnership would open up about 70 destinations across Asia, India and Africa, as well as be positive for Australian tourism, Mr Borghetti said in a statement.
Speaking after the Virgin’s annual general meeting in Brisbane last week, Mr Borghetti said the airline’s plans to expand its international flying were dependent on ACCC approval for the Singapore Airlines tie-up, among other things.
Reciprocal frequent flyer points earning and burning were expected to be in place by the end of the year, Singapore Airlines said in a statement, with codeshare flights due to start early in 2012.
Virgin Blue Holding shares gained 2.9 per cent, or one cent, to close at 35 cents.