Virgin Australia closer to deal with Branson’s Virgin Atlantic

Virgin nearer to tie-up with Richard Branson’s Virgin Atlantic that could aid struggling HK service.

Virgin Atlantic founder Sir Richard Branson. Picture: Jane Dempster

Virgin Australia has moved a step closer to winning approval for a new deal with Richard Branson’s Virgin Atlantic that it hopes will help bolster its struggling Hong Kong services.

The Australian Competition and Consumer Commission’s draft determination proposes to authorise the airlines to “more closely co-operate” on flights between Australia and the UK and Ireland, via Hong Kong, Los Angeles and any other future mutual connecting points.

ACCC commissioner Stephen Ridgeway said in authorising the co-operation, the watchdog “expected to see improvements to the carriers’ schedules and services to passengers”.

Virgin Australia hopes to increase passenger numbers as a result of the co-operation, particularly on its Hong Kong services.

Data compiled by the Bureau of Infrastructure, Transport and Regional Economics for July, showed Virgin’s flights from Sydney and Melbourne to Hong Kong had an average seat utilisation rate of 75 per cent, and just 60.7 per cent in the other direction.

A Virgin Australia spokeswoman welcomed the ACCC’s draft determination and said it was “great news for customers” who could expect more competitive pricing on overseas routes and enhanced reciprocal frequent flyer arrangements.

“We’re looking forward to providing guests with a unique Virgin experience all the way to the UK and Ireland via Hong Kong or Los Angeles, with further details about the arrangement to be shared in the coming months,” said the spokeswoman.

The ACCC said Virgin Australia and Virgin Atlantic were separate businesses that did not operate overlapping services on any routes and were unlikely to do so in the future.

“Authorisation will allow the two airlines to co-ordinate on a wide range of matters such as jointly managing prices, inventory, and marketing strategies, which are not currently permitted in their existing arm’s length commercial codeshare and loyalty arrangements,” the ACCC’s draft determination said.

Submissions to the draft determination are now being sought by the ACCC, with a final ruling due in November.