The approval by the Australian Competition and Consumer Commission of the take over of Tiger Airways Australia by Virgin Australia will reestablish a de-facto duopoly on domestic air routes within Australia.
SYDNEY- Australian skies will turn simpler in a very near future as the Australian Competition and Consumer Commission approved a 60% stake of Virgin Australia into the capital of low cost carrier Tiger Airways Australia. The competition watchdog announced in an official statement that it would not oppose Virgin Australia’s takeover of low-cost carrier Tiger Airways Australia as the acquisition is “unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services”.
Virgin Australia is the second largest domestic airline operator in Australia, behind the Qantas Group.
Tiger Australia is a domestic airline that commenced operations in November 2007 and currently services 16 domestic routes with 11 aircraft. Tiger Australia operates under a low cost carrier model which primarily focuses on price sensitive leisure travellers. In its six years of existence, Tiger Airways Australia never managed to break-even.
ACCC Chairman Rod Sims said the ACCC had taken particular regard to Tiger Australia’s history of poor financial and operational performance and concluded that its 11 Airbus A320 planes would probably be transferred to Asia if the deal was not concluded. Mr Sims believes that Virgin will then turn Tiger into a real competitior to the Jetstar/Qantas group.
Virgin Australia strongly believes the proposed acquisition will increase competition in the market to the benefit of Australian consumers. “We are very pleased to receive clearance from the ACCC for the proposed acquisition of 60 per cent of Tiger Australia,’’ chief executive John Borghetti said. It seems that Virgin Australia promised to pump A$ 62.5 million into the ailing company.
The decision came as Tiger’s Singaporean owners had earlier expressed to shut down the airline of a deal was not sealed.
Earlier this month, Virgin Australia already completed the acquisition of regional domestic carrier by taking over 100% of the issued share capital of Skywest Airlines Ltd. Completion of the acquisition announced on 30 October 2012 provides Virgin Australia with the assets and capabilities to fast-track its advancement into the growth fly-in-fly-out and regional markets, in particular out of Western Australia.
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
