Virgin Blue, Air NZ Win Australia Approval to Cooperate on Tasman Routes

Virgin Blue Holdings Ltd. and Air New Zealand Ltd. won Australian antitrust approval to cooperate on flights across the Tasman Sea after the regulator imposed conditions to allay its earlier objections to the plan.

The airlines will be allowed to coordinate prices, schedules and capacity between Australia and New Zealand for three years as long as they maintain and add seats on some routes, the Australian Competition and Consumer Commission said in a statement today.

Shares of Virgin Blue, which also won approval for a separate accord with Etihad Airways, and Air NZ rose on optimism the tie-up will help them compete with Qantas Airways Ltd. and its Jetstar budget unit. New Zealand’s Minister of Transport is also likely to rule on the deal within the next few days, Auckland-based Air NZ said in a statement.

“These are truly game-changing alliances,” Virgin Blue Chief Executive Officer John Borghetti said about the Air NZ and Etihad deals in a statement. “We are extremely pleased that the way is now cleared for us to create a truly global airline.”

Virgin Blue, Australia’s second-largest carrier, rose 5.9 percent to 45 Australian cents at the 4:10 p.m. close of trading in Sydney. That was the biggest gain since Sept. 7. Air NZ added 1.4 percent to NZ$1.45 in Wellington trading, its highest close since April 12.

Wellington Routes

Virgin Blue and Auckland-based Air NZ had sought approval to cooperate for five years. The regulator, which ruled against the pact in a preliminary opinion in September, only granted permission until December 2013.

“The ACCC is still concerned that the alliance may affect competition on a number of routes between Australia and New Zealand, particularly routes involving Wellington,” Commission Chairman Graeme Samuel said in the statement. “The ACCC has imposed a number of conditions on authorization which are designed to address these competition concerns.”

Under the Etihad pact, Brisbane-based Virgin Blue and Etihad will be able to cooperate on prices and schedules between Australia and Abu Dhabi, the United Arab Emirates.

To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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