Watchdog allows Virgin Australia’s 60% stake in Tiger
Australia's competition regulator on Tuesday approved Virgin
Australia purchase of a 60 percent stake in low-cost rival Tiger Airways
Australia, despite concerns about the market becoming a duopoly.
 |
|
Tiger Airways planes sitting idle at
Melbourne Airporton. Australias competition regulator on
April 23, 2013 approved Virgin Australia buying a 60 percent
stake in low-cost rival Tiger Airways Australia, despite
concerns about the market becoming a duopoly. AFP |
Virgin is Australia's second-largest carrier after Qantas and the
Australian Competition and Consumer Commission (ACCC) had previously
said it was worried about the impact on consumers of two main airlines
controlling the market.
But it ruled on Tuesday that “this acquisition is unlikely to lead to
a substantial lessening of competition in the Australian market for
domestic air passenger transport services.”
“Essential to reaching this view was the ACCC's assessment ... that
Tiger Australia would be highly unlikely to remain in the local market
if the proposed acquisition didn't proceed,” ACCC chairman Rod Sims
said.
“Absent this conclusion the acquisition raised considerable
competition concerns.” Tiger Airways Australia is the loss-making local
subsidiary of Singapore's Tiger Airways and Sims said it had a history
of poor financial and operational performance.It was grounded by
Australia's air safety regulator for six weeks in 2011 in an
unprecedented move over concerns about pilot proficiency, training and
fatigue management.
Sims said the ACCC saw little chance that any other shareholders or
partners would be able to turn around the airline, potentially leading
to Tiger redeploying aircraft into its Singapore-based parent's global
operations.
“We concluded that it was highly likely that Tiger Australia would
leave the market if this acquisition didn't go ahead, and accordingly
blocking the acquisition would not serve to protect competition,” Sims
said.
Tiger Australia launched in November 2007 and services 16 domestic
routes with 11 aircraft.
AFP
|
