Etihad-Virgin Blue Alliance Wins Tentative Australian Regulatory Approval

The Australian Competition and Consumer Commission (ACCC) has issued a draft determination proposing to grant authorization for a planned alliance between Etihad Airways and the airlines of the Virgin Blue Group.

While the ACCC’s draft determination represents only tentative approval for now, the Centre for Asia Pacific Aviation (CAPA) reports that the deal “is almost certain to be approved, as there was no opposition, with most parties in fact strongly supporting the application”. The International Air Services Commission (IASC), which is responsible for authorizations relating to grants of bilateral air services rights, also has to approve the proposed alliance.

However, notes CAPA, “The IASC has already approved the codeshare agreements between the applicants on a number of routes so that the airlines have been able jointly to price and market their services.” The aviation-analysis firm also points out that “ACCC procedures allow for a “conference” for discussion of issues if any party requests it, but here there would appear no need”.

Accordingly, the final determination should be forthcoming by early January, CAPA says.

The alliance between Australia’s Virgin Blue Group and Abu Dhabi’s Etihad Airways would offer customers a combined global flight network of more than 100 destinations, connecting passengers between Australia and Europe, the Middle East, Asia, and North America .

“We are delighted by the draft determination, and are confident that this alliance will promote competition and generate benefits for travellers,” James Hogan, Etihad Airways’ chief executive officer, says in a statement.

Brisbane-based Virgin Blue, the sister airline of V Australia in the Virgin Blue Group, operates a fleet that includes 19 Boeing 737-700s, a constantly growing number of 737-800s (the number could reach as many as 166 if Virgin Blue exercises all its options and purchase rights), six Embraer 170s and 15 Embraer 190s. In additon to the 79 737-800s that Virgin Blue has on firm order, the carrier has also ordered four Airbus A330-200 widebodies and three more Embraer 190s. Meanwhile, V Australia has a total of seven Boeing 777-300ERs in service and on order

“Partnering with Virgin Blue enables Etihad to offer customers 45 new destinations across Australia, New Zealand and the Pacific Islands, and opens a host of new connections and routings to Australian travellers via Abu Dhabi,” adds Hogan. “With our frequent flyer programs working together, Etihad and Virgin Blue offer a compelling travel option for corporate travel accounts worldwide, and we look forward to focusing on this important segment.”

Under the already-integrated Etihad Guest and Velocity frequent flyer programs, members of either program can earn and redeem status/tier points and frequent flyer points, and can take advantage of reciprocal service benefits and lounge access available to top-tier members.

In its approval summary statement, the ACCC said it “considers that the Alliance is likely to promote competition in the relevant markets and result in benefits for Australian consumers through new international services, increased online connections, enhanced value added services and stimulation of tourism.”

Assuming the alliance obtains final regulatory approval in time,Virgin Blue’s international arm, V Australia, will launch three-times-weekly direct services to Abu Dhabi from Sydney in February.

The addition of this new service will mean Etihad and V Australia operating a total of 27 weekly services between Abu Dhabi and Australia. These services will include double-daily flights between Abu Dhabi and Sydney (11 of them operated by Etihad Airways), daily flights between Abu Dhabi and Melbourne (also operated byEtihad Airways), and six frequencies per week between Abu Dhabi and Brisbane. Three of the Abu Dhabi-Brisbane flights will be oeprated by V Australia, via Singapore, from February 2012.

Etihad Airways operates service from its hub at Abu Dhabi International Airport to 65 cities in the Middle East, Africa, Indian sub-continent, Asia, Australia and North America (New York, Chicago and Toronto) with a fleet of 57 Airbus and Boeing aircraft.

V Australia operates four Boeing 777-300ERs on routes linking Australia with Los Angeles, Johannesburg, Phuket and Nadi in Fiji. The carrier also has another three Boeing 777-300ERs on order.

Its sister carrier Virgin Blue operates a fleet of approximately 50 Boeing 737NGs, six Embraer 170s and 15 Embraer 190s on Australian domestic and regional international routes and it has orders outstanding for four Airbus A330-200s, as many as 79 additional 737NGs (plus options and purchase rights on 55 more) and three more Embraer 190s, according to Wikipedia.

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