Air New Zealand ends alliance with Virgin Australia

April 04, 2018
Air New Zealand Pacific premium economy
Auir New Zealand's home base in Auckland. Photo: Steve Creedy

Air New Zealand and Virgin Australia are getting divorced in a trans-Tasman shake-up that could see low-cost carrier Tigerair Australia enter the market.

The airlines confirmed on Wednesday that Air New Zealand had moved to end the strategic alliance between the two on flights between Australia and New Zealand. The trans-Tasman alliance, which began in 2010, expires in October and the parties will not apply for renewal.

The Kiwi carrier had already sold its equity stake in Virgin to China’s Nanshan Group, arguing the money could be better spent on furthering its own strategy. It has also been heavily  marketing its services in the Australian market as part of a strategy to make Auckland a hub for travel around the Pacific Rim.

Its decision to dissolve the alliance makes for interesting times on the busy trans-Tasman market, where Qantas partner Emirates has also slashed its operations. Qantas boosted services to compensate and upgraded some Boeing 737 flights to Airbus A330s.

Air New Zealand said the current trans-Tasman arrangement would remain in place until October 27 and customers traveling before this date would be unaffected.

Those traveling after this date would be contacted by the airline with which they booked.

“Australia is the largest source of inbound visitors to New Zealand and Air New Zealand has built up a significant presence in this market,’’ Air New Zealand chief revenue officer Cam Wallace said in the announcement.

“This move will enable us to deliver a more consistent customer experience by using our own fleet and delivering an improved schedule, which we’ll provide more details about shortly.

“We remain fully committed to our other alliance relationships and our overall global airline alliance strategy as a critical success factor in other markets.”

Virgin Australia said it would work through arrangements with Air New Zealand regarding codeshare, scheduling, inflight offerings, lounge access and frequent flyer reciprocity to ensure minimal disruption to customers.

It said customers would be notified of any changes as soon as possible.

“This provides opportunities for the Virgin Australia Group on the Tasman, including operating both the Virgin Australia and Tigerair Australia brands in the market,’’ Virgin chief executive John Borghetti said.

“The Virgin Australia Group has had a strong presence in the market since 2004 and we will continue to enhance our offering to suit both the business and leisure markets.

“Virgin Australia will continue its strong focus on providing competition and outstanding service on the Tasman, which remains an important part of our network and strategy as an airline group.”

Speculation has also centered recently on whether Etihad Airways would retain its stake in Virgin.

Read Etihad says Virgin Australia remains an important partner.