Virgin speaks out against Qantas-Emirates Tasman alliance

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

In a submission, Australia's second-largest airline told the regulator that "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.

"If there is a competition issue on the Tasman, the [Australian Competition and Consumer Commission] should consider excluding it from the authorisation of the Qantas-Emirates alliance rather than imposing conditions."

Qantas and Emirates are key rivals of both Virgin and Air New Zealand, which have had their own alliance on the trans-Tasman route since late 2010.

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

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."

Virgin walks a tightrope in airing its views on the Qantas-Emirates alliance, because it is waiting for the ACCC to decide whether to approve its bid to take control of Tiger Australia.

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