ACCC approves Delta-Virgin alliance for five more years

Virgin's Direct LAX-MEL services will cease on Oct 25. (Rob Finlayson)
A Virgin Australia Boeing 777-300ER used on the Sydney-Los Angeles and Brisbane-Los Angeles route. (Rob Finlayson)

Australia’s competition regulator has given final approval for Virgin Australia and Delta to extend their alliance on trans-Pacific routes for a further five years.

The final determination, handed down on Friday, follows the Australian Competition and Consumer Commission’s (ACCC) interim approval for the joint-venture partnership in June.

The ACCC said the alliance, which has been in place since 2009, would benefit consumers and allow Virgin and Delta to compete more effectively against the likes of Qantas, American Airlines and United that also fly between Australia and the US.

Delta Air Lines president Ed Bastien and Virgin Australia chief executive John Borghetti with reporters in Sydney. (Jordan Chong)
Delta Air Lines president Ed Bastien and Virgin Australia chief executive John Borghetti with reporters in Sydney in March 2015. (Jordan Chong)

“The ACCC accepts this integrated network will likely be valued by travellers between Australia and the US,” ACCC chairman Rod Sims said in a statement.

“Virgin and Delta operate return services between Sydney and Los Angeles, and Brisbane and Los Angeles – travellers use these key gateway points to then connect with other destinations. This is reflected in the growing number of passengers using such connecting services.

“The alliance has also resulted in enhanced products and services including increased and better connections, access to each other’s flights and better schedule spread, loyalty program benefits, and improved lounge access.”

Although Virgin and Delta had asked for a 10-year extension to their alliance, the ACCC said it decided to grant only a five-year extension due to the “ongoing evolution of services on the trans-Pacific and the dynamic nature of the aviation industry”.

Virgin Australia chief executive John Borghetti welcomed the ACCC’s decision.

“Since the launch of the alliance in 2009, Virgin Australia and Delta have delivered choice and competition across the Pacific,” Borghetti said in a statement.

Meanwhile, Virgin and Etihad Airways have lodged their application to the ACCC to extend their global alliance, which took off in October 2010 and covers Australasia, Europe, the Middle East, Pakistan and Africa, for a further 10 years.

Also, the ACCC is currently considering American and Qantas’s application for an expanded joint business agreement to reflect the US carrier’s return to Australia and the Flying Kangaroo’s resumption of Sydney-San Francisco flights. The application received interim authorisation in July.