Virgin Australia has finally received the tick of approval from the Australian Competition and Consumer Commission (ACCC) to buy a 60 per cent stake in Tiger Australia, a plan that Virgin first announced in October last year. While the ACCC was originally opposed to the deal on competition grounds, it has concluded that if Virgin doesn’t invest, Tiger will probably take its planes and go home to Singapore.
That outcome was foreshadowed in the ACCC’s comments earlier this year, and its statement today makes it crystal clear:
Essential to reaching this view was the ACCC’s assessment, made after thorough and extensive testing of the issue, that Tiger Australia would be highly unlikely to remain in the local market if the proposed acquisition didn’t proceed. Absent this conclusion the acquisition raised considerable competition concerns. In making this assessment the ACCC had particular regard to Tiger Australia’s history of poor financial and operational performance. In six years in Australia, Tiger has never made an operating profit, and its current losses are large.
Ouch. As we’ve noted before, this won’t make much practical difference to passengers, since there are no proposals to code-share or link flights between the two airlines.