24 Apr 2013

Airline takeover cleared by ACCC

5:36 am on 24 April 2013

The Australian Competition and Consumer Commission will not oppose a planned 60% takeover of Tiger by Virgin Australia.

The ABC reports the commission has concluded that Tiger Airways Australia would be unlikely to remain viable if Virgin's takeover was rejected.

In a statement, ACCC chairman Rod Sims said the acquisition is unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger services.

"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," he observed.

Instead, the ACCC concluded that the most likely scenario was Tiger exiting the Australian domestic market and redeploying its 11 Airbus aircraft into the global operations of its parent company in Singapore.

"The ACCC would always prefer to see a greater number of independent airlines competing in the domestic market," Mr Sims said.

"We concluded that it was highly likely that Tiger Australia would leave the market if this acquisition didn't go ahead, and accordingly blocking the acquisition would not serve to protect competition."