Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC) has said it will not stand in the way of a proposal from Virgin Australia and Air New Zealand to enter into a proposed unilateral codesharing arrangement on trans-Tasman routes between Australia and New Zealand.
In an interim report published on May 1, 2024, the ACCC said that it “intends to authorize” the proposed cooperation pending the hearing of any final objections on May 8, 2024. The ACCC is currently seeking submissions in response to its draft determination before making its final decision.
Codeshare agreements allow the marketing carrier (in this case, Virgin Australia) to sell an unlimited number of seats on the operating carrier services (here, Air New Zealand) providing there is inventory available on any given flight designated as a codeshare service.
Virgin Australia and Air New Zealand are seeking authorization for Virgin Australia to place its airline code on trans-Tasman routes operated by Air New Zealand. Such codeshare flights will originate and be sold in Australia but will carry Virgin Australia’s VA flight prefix on trans-Tasman services operated by the New Zealand carrier.
The codeshare rights are set to be approved by the ACCC on the condition that Air New Zealand specifies the fares at which Virgin Australia may market and resupply those itineraries. Virgin Australia and Air New Zealand will also be able to jointly provide businesses with discounts and other marketing offers for VA-coded trans-Tasman services.
“This proposed code-sharing arrangement has the potential to increase ticketing choices for Australians traveling to New Zealand and provide Velocity frequent flyer program benefits and international lounge access for eligible Virgin Australia customers,” ACCC Deputy Chair Mick Keogh said.
The ACCC took note in its determination of concerns raised by consumer groups that the code-sharing arrangements could result in increased demand for Air New Zealand trans-Tasman services and upward pressure on airfares.
“We consider it unlikely that any significant increase in passenger demand for trans-Tasman services due to this code-sharing arrangement would raise airfares,” Keogh said.
Currently, Virgin Australia operates its own services on routes between Queenstown located on New Zealand’s South Island, and Melbourne (MEL), Sydney (SYD), and Brisbane (BNE). The proposed arrangements will not apply to these routes nor to any routes where Virgin Australia commences operating its own services in direct competition with Air New Zealand.
“On current information, we also consider that the code-sharing arrangements do not materially reduce Virgin Australia’s incentive to operate its own services on other trans-Tasman routes,” said Keogh.
Further details
The ACCC has also granted interim authorization to allow Virgin Australia and Air New Zealand to commence commercial planning for any marketing and selling of fares for VA-coded trans-Tasman services.
“The interim authorization excludes the direct or indirect marketing, provision of offers, and sale of fares to all customers before the ACCC makes its final determination,” Keogh added.
ACCC authorization provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act (CCA). In broad terms, the ACCC can grant its authorization once it is satisfied that the public benefit from the conduct would be likely to outweigh any public detriment.