Australia’s competition watchdog has struck a blow for low fares by raising concerns over plans by Virgin Australia to take control of Tiger Australia.
Head of the Australian Competition and Consumer Commission, Rod Sims, said the regulator’s preliminary view was that the proposed acquisition "may raise competition concerns in the market for Australian domestic air passenger transport services".
He said the concerns related to "the risk of muted competition following the reduction in the number of airline groups within Australia from three to two … and the loss of Tiger Australia as an independently owned discount operator".
"This potential reduction in competition arises as a result of the increased ability on the part of Qantas-Jetstar and Virgin Australia-Tiger Australia to coordinate their activities once Tiger Australia is no longer operating as an independent low-cost carrier," Sims said.
However, the ACCC said it would take into serious consideration the impact of Tiger exiting the domestic market if the deal was not approved.
"This would be highly relevant to our assessment," Sims said.
In a statement, Virgin Australia said it was in the process of reviewing the ACCC document and preparing its response.
A final decision by the ACCC is expected on March 14.
