tip off

Virgin Tiger decision postponed until 14 March

The ACCC says it will not make a final decision on the proposal that Virgin Australia take a controlling 60% stake in Tiger Australia until the middle of March, and that the issue as to whether or not the low cost carrier would shut down its operations in the absence of approval will be ‘highly relevant’ to that decision.

The competition authority had been expected to make its final decision on the proposal today.

In its statement today, inviting further comment and submissions on the application, the ACCC says:

The statement points to a probability that the ACCC may approve the plan.

It had earlier expressed reservations about the competitive effects of Tiger Australia being controlled by Virgin Australia, which it also restated this morning.

Update: Tiger Australia has responded to the decision as follows

Tiger Airways Holdings notes the Statement of Issues published by the ACCC today which expresses its preliminary views on the proposed joint venture with Virgin Australia in Australia. Tiger will be providing a response to the ACCC regarding the Statement of Issues.

We reiterate our position that this joint venture with Virgin will allow Tiger Australia to compete more effectively in the Australian market, resulting in more low cost flights and continued benefits to consumers.

Given the matter is subject to review by the ACCC and as the interested party, it’s not appropriate for Tiger to comment further at this time.


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  • 1
    Marty roberts
    Posted February 7, 2013 at 10:03 am | Permalink

    ACCC seem to have acknowledged what tigers parent and virgin have already publicly stated.
    It’s grow or no go.
    Why then the need for comment? seems overly conservative and bureaucratic delay.
    Here’s my comment; approve the bloody tie up already!

  • 2
    Posted February 7, 2013 at 10:57 am | Permalink

    I think the penny has dropped with Sims. What he appears to be doing now is seeking an assurance from Virgin and SIA that they won’t shut down Tiger. He is aware of the derision the ACCC would attract if it was to help reduce competition. Bottom line is that, if Borghetti used TT as a trojan horse to attack QF and JQ, it would lose even more money than it’s already doing. As TT demonstrated this week with its expansion into new markets (MEL-ASP, SYD-ASP, MEL-MCY and SYD-CNS), the key to future profitability is increasing leisure yield (and business yield in markets with multiple daily frequencies) by moving to markets where competition is weakest – not going head-to-head with the QF-DJ widebody capacity war across the Nullabor, for example. TT has only one viable future and that requires it to operate autonomously. With luck, Sims may be on the verge of grasping that concept.