Virgin Australia seeks extension to Etihad deal

Virgin Australia has told the ACCC the renewal of its alliance with Abu Dhabi-based Etihad is vital to its success.

Virgin Australia has told the competition watchdog the renewal of its alliance with Abu Dhabi-based Etihad is vital to its success and has asked that it be extended for a decade.

The move comes as the Australian Competition & Consumer Commission yesterday reauthorised Virgin’s trans-Pacific alliance with US giant Delta Air Lines for five years, half the requested 10 years.

In their submission on the Abu Dhabi Alliance, Virgin and Etihad say they have more than doubled the capacity operated by the alliance between Australia and the United Arab Emirates.

This had included new daily non-stop services between from Perth and Brisbane as well as an increase to double daily services from Sydney and Melbourne.

Other benefits included upgraded planes and a heavy investment in Australian tourism promotion. But a key for Virgin is the 39 international codeshare destinations in Europe, the Middle East, Pakistan, and Africa it can connect with 50 destinations in Australasia.

“For Virgin Australia, access to Etihad’s international network is vital,’’ the submission said. “No matter how good Virgin Australia’s domestic offering is, it will always face challenges in attracting corporate accounts and high-frequency travellers away from its rivals if it can’t offer a competitive international network.’’

Virgin’s alliances with Etihad and Delta help it to compete with Qantas-Emirates on European routes and the rejuvenated Qantas-American alliance across the Pacific. The Pacific route is set to become more competitive in ­December when American starts flying to Australia.

The trans-Pacific alliance allows Virgin and Delta to coordinate the operations between Australia and the US and link into each other’s domestic networks and gives them a combined market share of about 37 per cent.

The ACCC said it the network was likely to be valued by travellers between Australia and the US and that this was reflected in a growing number of passengers using connecting services such as that offered by Virgin and Delta.