Virgin in plea to ACCC in row with Qantas over government aid

ACCC chair Rod Sims says watchdog will investigate Virgin Australia’s “serious” complaint against Qantas.

Qantas CEO Alan Joyce and Virgin Australia CEO Paul Scurrah teamed up to take on airports last year, speaking at the National Press Club in Canberra. Picture: Gary Ramage

Australia’s competition watchdog will investigate a complaint made by Virgin Australia against Qantas, accusing the larger airline of campaigning for its demise.

Australian Competition and Consumer Commission chairman Rod Sims confirmed Virgin Australia CEO Paul Scurrah had written to him with a formal complaint.

The letter, seen by The Australian, raised concerns about public comments by Qantas CEO Alan Joyce, “directly or indirectly questioning Virgin Australia’s financial viability and encouraging government to refrain from extending any support for the aviation industry to Virgin Australia”.

“We have received reports of Qantas briefing journalists on the false pretence that Virgin Australia cash reserves are running out within days and that Virgin Australia has appointed administrators,” Mr Scurrah wrote.

“We are gathering together a range of examples of this conduct to send to you.”

Mr Sims said it was “obviously a serious issue”.

“Has Qantas breached the law? We will look into that. It’s very early days so there’s not much more I can say about that,” said Mr Sims.

“Separately, I certainly was surprised by Alan Joyce’s comments and the tone of those comments.”

He said the reference to “survival of the fittest” followed by talk about the government not giving them support implied that Virgin might be in trouble.

“The language could be seen as ‘wouldn’t it be good if they weren’t here anymore’,” Mr Sims said.

“It’s just the whole thing as it came together was not what we needed to be seeing at this time in Australia.”

The ACCC chairman said the Prime Minister had indicated Australia needed to come through the coronavirus crisis with the economy intact, and a competitive aviation industry was central to that.

“We entered this crisis with two major full service airlines and it’s really crucial that we come out of it with two full service airlines,” said Mr Sims.

“That’s just so important for the future of the Australian economy.”

Qantas and Virgin Australia have both come under enormous pressure in recent weeks, with frequently changing travel restrictions designed to stem the spread of COVID-19, forcing extensive cuts to capacity.

As a result Qantas is in the process of standing down two-thirds of its workforce, or 20,000 employees and grounding 150 aircraft - more than half of its fleet.

Further changes are expected in coming days in response to state-by-state border restrictions making even domestic travel near impossible.

Mr Scurrah said last week, the industry should be working together, adding it was “not a game of Survivor”.

Mr Joyce told employees he wanted all airlines to be treated equally and urged them to contact their member of parliament to reinforce that message.

“Governments aren’t there to pick winners and losers; governments are definitely not there to support a company that’s been badly managed for 10 years, and governments are definitely not there to support a company that’s owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire,” Mr Joyce said in a conference call with staff. “They are there to do what’s best for Australia.”

A senior Qantas spokesman said it was true the airline had been “very candid” in its assessment of what was happening to airlines around the world and the fact they wanted to be different.

“Saying you want to survive is not anti-competitive,” said the spokesman.

“It’s a tough time for everyone in aviation which is why we said that any assistance should be industry-wide and proportional. We don’t think that’s controversial or anti-competitive and it’s exactly what the government has done with its aviation support package.”