A confident Air New Zealand will look at increasing capacity between Australia and New Zealand as it manages its divorce from alliance partner Virgin Australia.
The Kiwi carrier surprised industry figures in Australia on April 4 with its announcement it was ending its seven-year alliance with Virgin and turning its back on the domestic feed from the Australian carrier’s network.
READ Air New Zealand ends its alliance with Virgin Australia.
The current trans-Tasman alliance will remain in place until October 27 and customers traveling before that date will be unaffected.
In the meantime, the pair will look at untangling arrangements covering areas such as codesharinge, lounge access and frequent flyer reciprocity
The split will then effectively turn AirNZ’s Australian partner into a competitor, making the already tough trans-Tasman market a three-way battle.
It also frees up Virgin to introduce new products in the market, including its low-cost carrier Tigerair Australia.
Air New Zealand chief revenue officer Cam Wallace told AirlineRatings a trigger for the decision was the costly and time-consuming process of renewing the alliance when it expires in October and uncertainty about approval after the withdrawal from the trans-Tasman of Qantas partner Emirates.
“it was really a defining point to say do we want to be doing this for the next three or five or seven years or could we look at it in a different way have a different solution,’’ he said.
“And that’s ultimately where we got to.’’
Wallace said the decision to enter into the alliance seven years ago was correct but the market had since changed “pretty materially”.
He said Air New Zealand since then had invested more time, money and effort in Australia in terms of labor resources and marketing.
It had also activated Australia as a one-stop market with more destinations such as Houston, Chicago and Buenos Aries.
“We’re capturing lot more one-stop, long-haul business out of Australia,’’ he said.
“And then ultimately, we do think it’s a better proposition to serve our customers consistently with our own planes, our own people, our own products.”
The AirNZ executive said the airline wanted to grow in the trans-Tasman market and it had the fleet flexibility to change aircraft types and flight frequencies.
It also serviced a lot of point-to-point markets in Australia.
“it’s not just Sydney-Brisbane-Melbourne – the triangle – there’s Adelaide, there’s Perth, there’s Coolangatta, there’s Cairns,’’ he said.
“So we service most of the business and tourism markets of Australia and we’ll obviously be looking at our network plan and adding capacity where it’s viable to do so.”
Air New Zealand is also not ruling out some other form of co-operation with Virgin but Wallace said that would be up to the Australian carrier.
Asked about the new competitive dimension on the Tasman and the possibility Virgin could deploy Tigerair on the route, Wallace said Air New Zealand had no visibility on how Virgin and Qantas would respond.
“The market’s still going to be tremendously competitive and certainly we want our fair share of the market because ultimately it’s more than 20 percent of what we do as an airline so we absolutely have to have success in this market,’’ he said
