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ACCC orders Virgin Australia to cooperate with Virgin Atlantic
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  • The ACCC has issued a determination authorising Virgin Australia to work more closely with Virgin Atlantic
  • The two companies will work together with flights between Australia, Ireland and the U.K. via Hong Kong and Los Angeles
  • The businesses already have an arrangement that allows each to market flights on planes flown by the other
  • The ACCC has authorised the conduct until November 30, 2024
  • Virgin's share price is steady today with shares trading for 15.5 cents apiece

The ACCC has issued a determination authorising Virgin Australia to work more closely with Virgin Atlantic.

The two companies will work together with flights between Australia, Ireland and the U.K. via Hong Kong, Los Angeles and any other future connecting points.

On June 3, 2019, both companies applied for authorisation for this route and a month later the ACCC granted interim authorisation.

A draft authorisation was released on September 13, 2019.

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

The ACCC may grant an authorisation when it is satisfied that the public will benefit from it and it outweighs any public damage.

Presently, Virgin Australia and Virgin Atlantic are separate businesses whose services do not overlap on any route and are unlikely to do so in the future.

The businesses already have a codeshare arrangement, which allows two or more airlines to share the same flight.

A seat can be purchased from an airline on a flight that is actually operated by another company under a different code or flight number and vice versa.

"The arrangements which have been authorised will not lessen competition on any route, and are likely to provide public benefits, including through improved scheduling and enhanced loyalty program benefits," ACCC Commissioner Stephen Ridgeway said.

Virgin Australia says the partnership will increase its passenger numbers, making its Hong Kong services more sustainable.

The authorisation will allow the two airlines to coordinate on a wide range of matters, such as managing prices, inventory, and marketing strategies.

As it stands, these agreements are not permitted in the existing commercial codeshare and loyalty arrangements.

Virgin Australia and Virgin Atlantic have previously been engaged in a codeshare partnership which allowed increased loyalty rewards for customers of both airlines through mutual frequent flyer programs and lounge access.

The ACCC has authorised the conduct until November 30, 2024.

Virgin Australia's share price is steady today with share trading for 15.5 cents apiece in a $1.309 billion market cap.

VAH by the numbers
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