Air NZ-Virgin talk

By Graeme Kennedy

Friday 15th March 2002

Air New Zealand is expected to seek urgent talks with Virgin Blue's new Australian owners to hammer out a mutual passenger-feed agreement on domestic and Tasman routes.

The 82% government-owned New Zealand carrier had begun similar negotiations with Sir Richard Branson's cut-price airline before logistics giant Patrick Corporation bought 50% of the company this week for $A260 million.

Air New Zealand needs a guaranteed Australian passenger flow to replace traffic generated by its former 100%-owned subsidiary Ansett, which collapsed last month, leaving it with a $376.5 million loss for the half-year to December 31.

Virgin Blue's own plans to operate on the Tasman and domestically in New Zealand are understood to have been temporarily shelved as the carrier instead focuses on strengthening its position against Qantas in the Australian domestic market.

The airline initially wants to lift its market share from about 15% to 30%. Patrick managing director Chris Corrigan said having watched Virgin grow from two aircraft to 16 in just 20 months and with another seven to be delivered this year he had "every confidence" in the company's expansion plans.

Mr Corrigan said Virgin Blue, with about 1500 staff and routes to all Australian states and territories, could operate international services "in the future."

"Virgin Blue has changed the face of Australian aviation by bringing friendly, efficient and low-cost service to the Australian public," he said.

Sir Richard described Patrick as the ideal partner for his Australian subsidiary - "one of the most innovative in the Asia-Pacific region."

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