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Tuesday, September 14, 2010

More DJ woes? (warning opinionated)

Are there more woes in store for the Virgin Blue group after the recent announcement of the departure from NZ domestic flights and the knock backs from competition watch dogs for the proposed tie ups with Delta Airlines and Air New Zealand?

Two new articles published in the media suggest that there may be.

The first published by TVNZ HERE covers an interview with Sir Richard Branson by ABC where he mentions Pacific Blue may pull out from trans tasman routes as well.
Virgin Blue may abandon trans-Tasman routes after its alliance plans with Air New Zealand were dealt a blow by Australia's competition regulator, which issued a draft decision denying them permission to merge.
The second from The Australian HERE reports on a submission lodged with the ACCC by Qantas in opposition to the proposed alliance between DJ and Etihad (EY)
Qantas has lodged a submission with the Australian Competition & Consumer Commission expressing concern about Virgin Blue's alliance with Abu Dhabi-based Etihad and calling on the regulator to ignore calls by the airline to fast-track the process.
I believe that the first article is posturing from Sir Richard in an attempt to convince the regulator that they have made the wrong decision, although I do believe Pacific Blue are suffering financial strain on the tasman, and believe that there is a strong possibility in a year or so that if things have not improved then yes indeed you will see Pacific Blue drop routes across the tasman.

The second article I believe is Qantas once again playing the bully boy stand over tactics role, that they have become famous for.  Qantas are annoyed that Etihad has decided to join DJ in an agreement that has far outweighed their previous code-share agreement with QF, an agreement QF promptly dropped when EY announced they were going to work with DJ.  QF are also worried that their anti-competitive deal with BA on Australia-Europe routes will be jeopardised and offer travellers different cheaper options for travel between the two regions.  This is complete and utter rubbish as it makes things better for the public not worse as QF state in their submission.

Unfortunately for DJ I believe QF have the ACCC as their own personal lap dog as witnessed by the ACCCs keenness to extend the monopolistic code-share agreement between QF and SA on the South African routes and also their willingness to ok the anti competitive BA/QF deal for European routes, and their instant dismissal of the proposals between DJ and DL/NZ

There is no way a second airline can flourish in this state when the competition regulator - set up supposedly with the best interests of the travelling public in mind, is in fact so strongly biased to the incumbent national airline.  The same problem raises its ugly head at home in New Zealand where NZ garners more support from regulators than the other airlines trying to make a living against their domestic monopoly, they too follow in the QF footsteps in their preditory tactics especially on regional routes.

I want to see DJ succeed and make an impact in the markets on both sides of the tasman, but I don't believe that is possible when the competition regulators on both sides of the tasman are so narrow minded and firmly embedded in the pockets of QF and to a lesser extent NZ.

The sooner the ACCC wake up and grow a pair, and actually stand up to QF, and give DJ and other smaller Australian airlines a fair go, the sooner the aviation market here and the trans tasman aviation market will be able to grow, and the sooner the travelling public will be able to reap the rewards of two or more competitive airlines, who don't all of a sudden drop routes, or fail completely, because they have been forced out of the market by bad decisions, which have caused them to become unprofitable, and therefore unable to fly.

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