Air NZ, Virgin Australia to end seven-year trans-Tasman alliance in October

Wednesday 4th April 2018

Air New Zealand and Virgin Australia Holdings will end their seven-year trans-Tasman alliance in October when regulatory approval for their shared services ends.

New Zealand's national carrier ended the strategic alliance, giving Virgin notice of its plans to quit the arrangement, the ASX-listed airline said in a statement. Separately, Air NZ chief revenue officer Cam Wallace said it was the right time for each airline to pursue their own goals and they wouldn't seek a renewal of the regulatory approval.

"Australia is the largest source of inbound visitors to New Zealand and Air New Zealand has built up a significant presence in this market," Wallace said. "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."

Virgin chief executive John Borghetti said the separation opens opportunities for its Virgin and Tiger brands on the Tasman route.

The tie-up was first mooted in 2010 in response to Qantas Airways' two-airline strategy where its budget Jetstar brand operated domestically in New Zealand and linked to longer-haul flights on the parent, letting Air NZ and Virgin codeshare on the Tasman and connecting flights and offer reciprocal frequent flyer and lounge access agreements.

Air New Zealand went on to build a 26 percent stake in Virgin Australia before selling in 2016 when the Australian airline raised capital from its shareholders to give it room to pursue more profitable business.

The airlines said there were no changes for bookings before Oct. 27 when the alliance ends, and that the carriers will work to ensure minimal disruption to customers.

Air NZ shares rose 3.9 percent to $3.325, having increased 0.3 percent so far this year, while Virgin fell 2.2 percent to 22.5 Australian cents.

(BusinessDesk)

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