Singapore Airlines and Virgin Australia play a familiar game

There was some reservation about Australia’s flag carrier Qantas objecting to a strategic alliance between Singapore Airlines (SIA) and Virgin Australia but, according to the Sydney Morning Herald, the Australian federal government is backing Virgin’s application for regulatory approval. That may signal a more liberal attitude towards competition although objection would have been untenable since Virgin, an Australian carrier, would benefit from the alliance. It only means heightened competition for Qantas.

The SIA/Virgin alliance would mean seamless transfers between Virgin and SIA flights and allows SIA access to places within the continent not served by the carrier. Better flight meshing should translate to customer benefits that include improved customer service and hopefully lower fares.

SIA chief executive Goh Choon Phong said: “With this cooperation, this will increase the flow of traffic on the existing routes and beyond.” He stopped short of mentioning specifically SIA’s dream of operating trans-Pacific to the United States from Australian ports. Aviation analysts think SIA hopes the alliance will mean a shortcut to achieving that goal.

One cannot help but recall how in 1999 SIA bought a 49 per stake in Virgin Atlantic for GBP 600 million (US$975 million) then as a way to gain trans-Atlantic access between Britain and the United States after repeated attempts for rights were turned down by the British authorities. More than 10 years after, SIA remains shut out (but operates out of Frankfurt instead) and not too enamoured with the performance of the joint venture. It is said to be looking for a prospective buyer.

Perhaps the time has changed, so too the competitive environment. Besides, Australia located at the far end of the world does not have the same geographical make-up of Britain and the rest of Europe. As Australian carriers look to augment their fortune in Asia and beyond, the Australian authorities may take a fresh view of reciprocity.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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