The Australian Competition and Consumer Commission (ACCC) has officially authorized Virgin Australia, HNA Group, Hong Kong Airlines, and HK Express to coordinate airline services for a period of five years beginning September 1, 2017.
The airlines had collectively sought authorization to make, and give effect to, their Alliance Framework Agreement and associated agreements which include codeshare and special prorate agreements, a reciprocal frequent flyer participation and lounge access agreement, and route planning agreements.
In a statement issued on Thursday, August 10, the regulator said it considered the alliance to be in the public's interest given the prospect of new services between Australia and Hong Kong and mainland China.
“The ACCC considers the alliance will likely realise significant public benefits, primarily through supporting the introduction of new services between Australia and mainland China and Hong Kong including by Virgin,” ACCC Commissioner Roger Featherston said. “The ACCC considers that the alliance is unlikely to result in any significant public detriment as there was unlikely to have been any material overlap between direct flights operated by Virgin and any of the other airlines in the short to medium term without the alliance in place.”
Given concerns raised by Air China (CA, Beijing Capital) and Cathay Pacific (CX, Hong Kong International) that the alliance's competition effects and public benefits should be tested over a shorter period, as well as its own assessment that services between Australia and mainland China and Australia and Hong Kong are evolving at a rapid rate, the ACCC did not grant the alliance the requested ten year authorization, instead offering only five.
