Virgin's China deal gets provisional green light for five years

Virgin Australia’s planned services to Hong Kong and China are gaining momentum after the Australian competition regulator announced it planned to approve a critical alliance involving part-owner HNA Group for five years. The Australian Competition and Consumer Commission (ACCC) issued a draft determination on Friday granting conditional approval for the alliance between the Australian carrier and HNA Aviation, Hong Kong Airlines and HK Express. The decision was in step with an ACCC decision to grant the alliance interim authorisation in March and will allow the partners to coordinate services between Australia and China. Virgin plans to launch services to Hong Kong on July 5 and has indicated it will follow up with mainland Chinese destinations, possibly Shanghai or Beijing. The deal will see Virgin and HNA enter reciprocal codeshare, lounge access and frequent flyer agreements as well as to coordinate pricing, sales and marketing. The ACCC believes the alliance will produce public benefits such as new and enhanced products and services, particularly from Virgin Australia. “The ACCC also considers that the alliance would, or would be likely to, result in some public benefit in the form of increased competition in international air passenger transport markets and stimulation of tourism through increased passenger traffic,’’ it said in its decision. “The ACCC considers that the Alliance is likely to result in little public detriment due to the lack of overlap between the Applicants’ current, and likely future, operations.’’ Virgin welcomed decision which is due to subject to a final ruling in July after a public comment period. “This new alliance will provide significantly more competition and choice for travellers,’’ Virgin Group chief executive John Borghetti said in a statement. “ When the alliance is in place, guests will enjoy an expanded network of destinations across Australia, mainland China and Hong Kong. “The alliance will also enable Virgin Australia to accelerate its access to the Chinese travel market and work with HNA in driving inbound visitors to Australia, which will benefit our tourism industry and broader economy.’’