Australia’s competition watchdog has given Virgin Australia the all-clear for a proposed 60 per cent takeover of Tiger Airways’ domestic operation.
This morning the ACCC said the deal was unlikely to hurt competition in the domestic airline market, especially since Tiger was unlikely to remain in the country if the deal does not go through.
If this hadn’t been the case, the proposal would have raised “considerable competition concerns,” said ACCC Chairman Rod Sims in a statement.
“In making this assessment the ACCC had particular regard to Tiger Australia’s history of poor financial and operational performance. In six years in Australia, Tiger has never made an operating profit, and its current losses are large. These losses remain a big drag on the entire Tiger group,” Sims said.
The proposed transaction still remains subject to certain conditions and regulatory approvals, including from the Foreign Investment Review Board.
Testing revealed there was little likelihood of Tiger’s Singapore-based parent company, or any other joint-venture partner or shareholder turning the company around either.
“Instead its key assets, being the 11 Airbus aircraft, would very likely be redeployed into the Asian operations of its parent company,” Sims said.
“Virgin Australia now has the opportunity to pursue its stated objective of transforming Tiger Australia into an effective competitor to Jetstar for price sensitive travellers.”
Virgin Australia is the second largest domestic airline operator in Australia, behind the Qantas Group. It welcomed the decision this morning.
Tiger Airways services 16 domestic routes with 11 aircraft.
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