Virgin fighting Qantas/Impulse deal hard

Virgin Blue is showing it is determined not to let Qantas squeeze it out of the newly-competitive domestic air travel market with its deal to take control of Impulse Airlines.

Virgin is therefore strongly opposing the deal via the ACCC on the grounds it has the potential to allow Qantas too much market domination. Both Virgin and Ansett have many concerns about the domination Qantas may have in the domestic travel market, not only from a price point of view, but also resources, marketing and service.

In case the Qantas-Impulse deal proceeds, Virgin is actively pursuing a range of options and discussions with other airlines (particularly Ansett and Air NZ) to find a way of competing on more equal terms with the expanded Qantas. These options are thought to include code sharing, resource sharing and more formal corporate alliances.

If the ACCC approves the Qantas-Impulse proposal and if Virgin and Ansett form some type of alliance, the question is will competition increase or will it just amount to a different type of two-airline policy and a return to the days of little effective competition.