Virgin Blue has welcomed the decision by the Australian Competition and Consumer Commission to begin proceedings against Qantas regarding Virgin Blueå‘s allegations that the dominant carrier used predatory practices on the Adelaide-Brisbane route.
The low fare carrier launched a daily direct flight 17 months ago on this previously under serviced route.
Qantas promptly responded by dropping its fares from over $500 return to just sixty cents below Virgin Blue while also increasing its capacity on the route by 50% with an additional 737 daily direct service. The new service coincided with Virgin Blue’s originally announced launch date during what is traditionally one of the slowest periods of the year.
The ACCC has confirmed it has commenced court proceedings against Qantas, after a detailed 15 month investigation in relation to Virgin Blue’s concerns.
The Commission has alleged that Qantas sought to substantially damage or eliminate Virgin Blue as a competitor and to prevent the entrance of the start-up airline into other aviation markets in Australia.
This included deterring or preventing the low-fare carrier from both expanding or developing its network across the country and offering competitive airfares to the Australian public.
Chief Executive, Brett Godfrey, said, We fully support the ACCC in taking action against Qantas’ apparent attempts to undermine low fare competition in Australia through predatory discounting and capacity dumping.
He continued, It is clear the ACCC believes that Qantas has engaged in this conduct in order to push Virgin Blue off the route or out of Australian skies altogether. We have and always will vigorously defend our right to offer low fares in a fair competitive environment.
Virgin Blue is also urging the Federal Government to review the Trade Practices Act to allow the ACCC to take urgent and effective action to eliminate predatory conduct, in line with the aviation regulation in place in Canada and the United States.
Brett Godfrey said, While we will clearly back the Commission’s decision to take court proceedings against Qantas, it shouldn’t take 17 months for action to be taken. This is a direct result of the lack of effective provisions in the Trade Practices Act to deal with this conduct efficiently and effectively. Unfortunately, other new entrant airlines such as Compass and Impulse weren’t able to make it this far.
With the time it has taken to properly prepare a case under the Trade Practices Act, Virgin Blue could have been forced off the route, leaving Qantas as the only carrier. That would have meant reduced competition, reduced availability of low fares and reduced options for travellers. Even now it could be a year or more before we get an outcome.
Virgin Blue has provided a submission to the ACCC in relation to its aviation competition inquiry calling for the urgent introduction of aviation regulations to ensure true competition prevails for the benefit of Australian travellers.
Virgin Blue currently services every State and Territory in the country with its fleet of 16 aircraft, including the brand new Next Generation Boeing 737 aircraft. Virgin Blue was recently named Best Low Fare Airline Australasia in the Skytrax Airline of The Year 2002 survey, the industry’s leading passenger survey.