SYDNEY--Australia's competition regulator Thursday expressed
concerns about Virgin Australia Ltd.'s (VAH.AU) move to take
control of the Australian arm of Tiger Airways Holdings Ltd.
(J7X.SG), saying it would create a duopoly in the skies.
However, the Australian Competition and Consumer Commission said
it could also approve the deal if a rejection could lead to Tiger
Australia exiting the market. Tiger Australia, a budget carrier,
has been struggling to regain customer confidence since its fleet
was temporarily grounded last year for safety breaches.
Virgin Australia in October agreed to buy 60% of Tiger Australia
for 35 million Australian dollars (US$36.1 million) from
Singapore's Tiger Airways.
In a preliminary view expressed ahead of its final ruling, the
ACCC said it was concerned the deal would cut the number of
airlines in Australia to two from three, increasing the scope for
price alignment between Virgin Australia and Qantas Airways Ltd.
(QAN.AU). Qantas owns the low-cost Jetstar carrier.
Risks arise from the increased ability of Qantas and Virgin
Australia "to coordinate their activities once Tiger Australia is
no longer operating as an independent low cost carrier", ACCC
Chairman Rod Sims said in a statement.
Mr. Sims said Virgin's intention to expand Tiger Australia's
fleet to 35 aircraft from the current 11 by 2018 would also be
looked upon favorably as it would make it harder to coordinate
pricing.
"If the ACCC were to conclude that Tiger Australia would exit
the market in the absence of the proposed acquisition, this would
be highly relevant to our assessment," Mr. Sims said.
The ACCC has invited further submissions from the market and
intends to make a final decision Mar. 14.
Write to Ross Kelly at ross.kelly@wsj.com
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