It comes after Qantas applied to the government to operate extra services to the popular holiday island in November before Virgin replied with a counteroffer.

The IASC now has to decide on a winner as there isn’t enough capacity to service both airlines’ ambitions.

Qantas wants to start daily Jetstar services between Cairns–Melbourne–Denpasar and three flights per week between Adelaide–Perth–Denpasar using its new fleet of A321LRs.

Virgin, meanwhile, is planning two daily services from the Gold Coast and Adelaide to Bali, both via Perth, on 737-800s.

ACCC general manger Katie Young said giving the flights to Virgin would be more conducive to competition, with Perth–Denpasar being Virgin’s first international service from the west coast since the pandemic.

“This proposal would introduce Australian competition between Perth and Denpasar, as well as reduce Jetstar’s dominance on services between Adelaide and Denpasar. It would also introduce competition for domestic connections between Gold Coast and Perth,” Young wrote.

“The ACCC anticipates that this new competition would likely result in better outcomes for passengers through lower prices and improved services.”

Jetstar is currently the only Australian carrier that flies between Perth and Denpasar, which it does approximately three times per day, and Qantas’ proposal would give it a further five flights per week; in contrast, Virgin would operate 14 flights per week between the two destinations.

Young said that a broader distribution of capacity would promote greater competition on Australia–Indonesia routes than “a single carrier [supplying] a high proportion of the available capacity”.

“An additional allocation of capacity to Jetstar would increase the level of concentration of capacity amongst the Australian providers of services on the route,” she wrote.

“Jetstar operated the largest number of seats between Australia and Indonesia during the year ending September 2023 with 43.4 per cent.

“The Qantas Group combined – comprising both Jetstar and Qantas – operated 54.8 per cent of seats on the route. In contrast, Virgin Australia operated 14.7 per cent of seats during this time.”

Additionally, Young argues that consumers would have more choice on Bali flights thanks to Virgin’s three-class cabins and competing loyalty program.

“While many passengers may prefer the Jetstar product offering with a focus on low airfares, others may prefer the Virgin Australia product offering including business class and Economy X seats, or otherwise be attracted to Virgin Australia because of membership with the Velocity frequent flyer program,” she wrote.

“Virgin Australia’s proposal would result in more people having a choice between these product offerings.”

Both the TWU and the FAAA have also backed Virgin over Jetstar, arguing that Virgin’s use of Australian-based crews would provide more jobs for local workers.