ACCC gives Virgin and Air New Zealand green light

Airlines get authorisation to continue their trans-Tasman alliance for five years

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Virgin Australia (ASX:VAH) and Air New Zealand (ASX:AIZ) have been given the go-ahead to maintain their trans-Tasman alliance for another five years.

The Australian Competition and Consumer Commission (ACCC) says authorisation is to commence on 1 January 2014, when the existing authorisation expires and run until October 2018.

"The ACCC considers that the alliance is likely to result in material public benefits by partnering Virgin Australia's domestic Australian network and sales presence with Air New Zealand's domestic network and sales presence to contribute to the formation of a second integrated Australasian network," ACCC Commissioner Dr Jill Walker said.

The alliance will allow the two airlines to offer enhanced products and services, such as increased flight frequencies and promote competition on trans-Tasman routes, particularly for business travellers, according to the ACCC.

But the ACCC has imposed some conditions on some routes across the Tasman, requiring Virgin and Air New Zealand to maintain capacity across those routes, with the ACCC set to review the capacity over the next two years, commencing in September 2015.

Both airlines should be delighted with the result, after pushing for a five-year authorisation, rather than the three years allowed under the ACCC's draft authorisation released in July this year.

Rival Qantas Airways (ASX:QAN) and its partner Emirates have also been granted a five-year authorisation for their trans-Tasman alliance, including Qantas subsidiary Jetstar. The regulator said it was also concerned that Virgin and Air New Zealand would be at some competitive disadvantage on their own against the Qantas-Jetstar/Emirates alliance.

Foolish takeaway

This is good news for travellers, which should allow Virgin to compete effectively against Qantas on trans-Tasman routes. That should mean lower fares, more flights and better products, including access to loyalty program benefits and lounges.

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new report: Is It Time to Sell Telstra?

More reading


Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »