ACCC: New powers to keep Qantas in line over Virgin purchase
Virgin Australia’s administrators have had an important victory in their request that the Government instruct the Australian Competition and Consumer Commission to keep an eye on the domestic flying market, to make sure Qantas doesn’t play funny buggers, while Virgin is re-structuring.
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Qantas, don’t even think about anti-competitive behaviour!
Potentially, Qantas could use its relative strength to wage a price and capacity war with Virgin Australia, derailing its recovery. Having the ACCC report quarterly on the industry to the government for the next three years, and with some enhanced powers under the Corporations Act should ensure that Qantas or anyone else for that matter, does not take unfair advantage of the situation.
The administrators for Virgin Australia, havn’t had it all their own way. A request to extend the benefits of the JobKeeper scheme (a COVID-19 related initiative where the government pays the equivalent of the basic [minimum] wage to employers who maintain jobs for their employees) fell on deaf ears recently.
Rod Simms, the chairman of the ACCC is no fool, and has already warned Qantas that its discount pricing – which CEO Alan Joyce argues is the way to get as many planes back in the sky as possible to stop Qantas haemorrhaging cash, could also be seen as predatory pricing.
That’s going to be a delicate tightrope to walk. Consumers love low pricing, as witnessed by the10,000 Jetstar AU$19 airfares selling out in 4 hours last week, testifies. But Qantas is also grabbing a large piece of the market, that Virgin – while in administration can’t afford a piece of.
Qantas maybe forgets to mention refunds
The ACCC is also shitty with Qantas for not making clear to consumers between mid-March and the end of May, that they have a right to a cash refund, and not just a right to a ‘flight credit’ if Qantas cancelled their flight.
Qantas of course doesn’t agree with the ACCC, but sent out an email to customers anyway making their rights a bit clearer.
Final Virgin Australia binding Bids due tomorrow 22 June 2020
Tomorrow should provide us with a bit more detail of what the two final bidders plan for the new Virgin Australia.
From what we already know, the proposals of Ban Captial and Cyrus Capital Partners don’t appear to be too far apart.
What we don’t know is the bidders plans for the Virgin workforce’s employment, or what will be the fate of the 6,000 retail bondholders who are set to lose up to AU$2 billion.
Bids are due by 2pm Monday. One of them will be the ‘winner’ with their bid presented to creditors in mid-august
This is not the first time that Qantas has had its knuckles wrapped by the ACCC. While presenting itself as a major Australian company that behaves terribly responsibly, Qantas is not beyond exhibiting some of the traits of a playground bully.
I’m getting bored with the Virgin Australia sale saga. Mind you since COVID-19, I seem to have the attention span of a gnat. And really, I should be in Vienna now contemplating a visit to the Secession building to see me some Klimt friezes.