ACCC gives Virgin the green light to take over Tiger

FEARS Tiger Airways would be forced to wind up its Australian operations was behind the Australian Competition and Consumer Commission's decision not to oppose Virgin's proposed acquisition of the struggling airline.

ACCC chairman Rod Sims said "considerable competition concerns" would arise if Virgin, Australia's second largest domestic airline, was blocked from buying 60% of Tiger Australia.

Singapore-owned Tiger Australia, which commenced operations in 2007, has failed to establish itself as a viable competitor in Australia's low-cost airfare market despite money being poured into it.

Tiger Australia currently services 16 domestic routes with 11 aircraft.

Mr Sims said Tiger's Australia's "history of poor financial and operational performance" was a key factor in the decision.

In six years Tiger Australia has failed to make an operating profit, with its current huge losses proving to be a "drag on the entire Tiger group", Mr Sims said.

Virgin now needs final approval from the Foreign Investment Review Board before it can pursue its plans to turn Tiger Australia into an effective competitor for rival budget airline Jetstar.

"The ACCC's view is that this acquisition is unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services," ACCC Chairman Rod Sims said.

"Essential to reaching this view was the ACCC's assessment, made after thorough and extensive testing of the issue, that Tiger Australia would be highly unlikely to remain in the local market if the proposed acquisition didn't proceed."

The ACCC also examined the likelihood of Tiger Australia's performance being improved by either its current owner or other potential shareholders or joint venture partners if the proposed acquisition did not go ahead.

It found Tiger Australia's fortunes being turned around by either scenario was unlikely.

"Instead its key assets, being the 11 Airbus aircraft, would very likely be redeployed into the Asian operations of its parent company," Mr Sims said.

"The ACCC would always prefer to see a greater number of independent airlines competing in the domestic market, however, our investigations showed ... 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."

Federal Transport Minister Anthony Albanese welcomed the ACCC's decision, which was made after consultation with rival airlines, airports, tourism organisations and industry bodies.

"The decision is good for Virgin and Tiger and tourism generally. Most importantly, this decision is good for jobs which will now be retained," Mr Albanese said.

Did you feel that? Sneaky reminder that autumn is here

Premium Content Did you feel that? Sneaky reminder that autumn is here

There was a definite coolness in the air last night

Woman barred from entering Byron Shire village for a year

Premium Content Woman barred from entering Byron Shire village for a year

She wielded two knives in the street, frightening the pub manager

Highlights of the Lismore Women’s Festival, starts today

Premium Content Highlights of the Lismore Women’s Festival, starts today

The events you should not miss at Lismore City Hall.