Virgin Australia, Alliance Airlines new relationship to bring back Albury-Sydney flights

The partnership has been earmarked as a way for Virgin to continue serving around 40 regional markets, including operating out of Albury Airport for the route which was cancelled in September.

In an application to the Australian Competition and Consumer Commission, the airlines are seeking to combine under a two-year deal.

The proposed partnership will enable Virgin and Alliance to "match appropriate and efficient aircraft to routes".

This could mean passengers on the new Albury-Sydney route will likely be travelling on a smaller Alliance aircraft, which the application said is due to "insufficient demand to be viably serviced with a Boeing 737".

In the pitch Virgin, who is now operating under new owners Bain Capital, is looking to move "to an all-Boeing 737 mainline fleet", which would include the removal its ATR turboprops.

This, they say, would create a hole in the airline's regional footprint.

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"Virgin Australia and Alliance Airlines seek authorisation, including urgent interim authorisation, to cooperate in relation to the provision of services on the specified regional and two short-haul international routes in order to efficiently manage capacity and quickly respond to changes in demand due to the COVID-19 pandemic," the application said.

"It is imperative that Virgin Australia begins to build its business again, regain customer confidence and demonstrate its commitment and ability to service the Australian domestic air travel market.

"Regional services are an important part of Virgin Australia's network and it remains committed to serving regional destinations in support of communities and businesses.

"However, they cannot efficiently operate regional services alone - this was always the case but COVID-19 has accelerated the need for the aviation sector, and Virgin Australia, to cut costs and simplify its fleet.

"By cooperating on the relevant routes, the applicants can efficiently offer a more compelling product, providing choice and convenience for consumers and competition for Qantas."

Currently Qantas and REX are the only airlines operating an Albury-Sydney service.

The two carriers already have a codeshare relationship on several routes from Brisbane.

The ACCC is expected to make a decision regarding interim authorisation within the week starting Monday, November 16.