Singapore deal won't stop Tiger fight: Virgin
Flight attendants from Singapore Airlines and Virgin Australia at the announcement in Singapore of the airlines' alliance Source: AFP
VIRGIN Australia has moved to assure the competition regulator that its alliance with Singapore Airlines will not reduce its incentive to compete against Tiger Airways Australia.
Australia's second-biggest carrier is seeking approval to form a marketing alliance with Singapore, which also owns a 33 per cent stake in Tiger Australia's Singaporean parent company and could end up with more.
Under the alliance, Singapore and Virgin would provide access to each other's frequent-flyer and lounge services and co-operate in areas such as corporate accounts, pricing and scheduling.
Responding to questions from the Australian Competition & Consumer Commission, Virgin lawyers Gilbert + Tobin said the alliance would have no effect on Virgin's "incentives to compete with Tiger Airways". They also gave a dismal assessment of Tiger's operations, noting its service levels were very low, it had poor customer satisfaction and was voted Australia's worst domestic airline in Choice's 2009 and 2010 airline satisfaction surveys.
They also point to poor on-time performance before Tiger's suspension by the Civil Aviation Safety Authority as well as poor levels of safety and management oversight.
"While Tiger Airways' fares were low, they did not represent good value in terms of the level of service offered," the lawyers' response said.
Asked what information the alliance partners would share, the lawyers said it would include confidential data such as pricing, load factors, route performance, forecast profitability, product initiatives, passenger numbers and passenger profiles.
They said it would be similar to the information shared with other alliance partners Delta Air Lines, Etihad and Air New Zealand. "Information sharing is necessary in order to achieve co-operation and the alliance objectives," the lawyers said.
"However, it is in the strong commercial interests of Virgin Australia to ensure that information shared under any alliance agreement is treated carefully and quarantined from any competitors of Virgin Australia."
The lawyer's letter reaffirmed that SIA and Virgin did not intend to codeshare on routes where the Australian carrier already codeshares with Etihad, saying to do so would result in product and brand confusion.
A key rationale for the Singapore alliance was to fill a gap in Virgin's offering to Asian destinations.
"The alliance with Singapore Airlines will allow Virgin Australia to fill this gap and complement its existing alliances with Etihad, Delta and Air New Zealand," the letter said.
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