Virgin Australia (VA, Brisbane International) has lodged a submission with the Australian Competition and Consumer Commission (ACCC) rejecting an anti-exclusivity condition imposed by the regulator regarding the airline's proposed alliance with China's HNA Group, Hong Kong Airlines (HX, Hong Kong International) and Hong Kong Express (Hong Kong International). Lawyers for the Australian carrier have said that the condition is unnecessary and too broad in its scope, and may unintentionally prevent the airlines from entering into future codeshare or interline agreements.
Under the draft determination issued by the ACCC last month, the two groups would not "enter into or give effect to any contract, arrangement or understanding which has the effect of preventing or restricting any of the Alliance airlines from entering into interline and/or codeshare agreements with any other airline."
Lawyers for Virgin say that the clause essentially restricts all the airlines involved in the alliance from entering into interline arrangements with any other airline on routes not specifically set to be unrestricted by the clause (domestic Australia, Australia-China and Australia-Hong Kong International). It was included by the ACCC in response to Air China (CA, Beijing Capital), which raised concerns that the alliance might restrict competition for feed traffic on Australian domestic routes if Chinese airlines were prevented from codesharing with Virgin Australia.
According to the submission, Air China's concerns are misplaced, as it already has an interline agreement with Virgin which is unaffected by the proposed alliance.
Virgin says that the clause could have 'unintended consequences'.
"A broad condition of the type proposed could undermine the ability of the Applicants to align their commercial interests, which would put the benefits promised by the Alliance (and recognised in the Draft Determination) at risk," the submission closes.
