Virgin queries Qantas on Tasman

Virgin Australia has urged the competition regulator to stop Qantas and Emirates from forming an alliance on the trans-Tasman route unless there are benefits to the flying public.

Virgin Australia has urged the competition regulator to stop Qantas and Emirates from forming an alliance on the trans-Tasman route unless there are benefits to the flying public.

Australia's second-largest airline has told the regulator that the "claimed public benefits" of the Qantas-Emirates alliance did not extend to routes between Australia and New Zealand.

"While there may be public benefits that arise in relation to flights to Europe, it is not clear that there are material public benefits from the Qantas-Emirates alliance on the Tasman," it said in a submission. "If there is a competition issue on the Tasman, the commission should consider excluding it from the authorisation of the Qantas-Emirates alliance rather than imposing conditions."

Qantas and Emirates are rivals of both Virgin and Air New Zealand, which have had their own alliance on the trans-Tasman route since late 2010. The Australian Competition and Consumer Commission has given tentative approval to Qantas' extensive alliance with Emirates - which is mostly focused on routes to Europe via Dubai - but has raised concerns about its impact on the trans-Tasman route. The regulator has indicated that it will make the pair live up to their promise not to reduce overall capacity on routes between Australia and New Zealand.

The ACCC is concerned that Qantas and Emirates may have an incentive to reduce growth on the four trans-Tasman routes they have overlapping services in order to raise fares.

But Virgin is opposed to the regulator forcing the airlines to adhere to growth targets, especially on individual routes between Australia and New Zealand. "The costs and inflexibility of a capacity condition are greatest when applied on a route specific basis," it said.

"Any capacity condition should only apply as a floor against anti-competitive reductions."

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