Air New Zealand and Virgin Australia have welcomed the ACCC’s draft determination to conditionally reauthorise the airlines’ trans-Tasman alliance for a further three years, albeit two years short of the period sought by the two airlines.
Under the alliance, which has been in effect for two years, Virgin and Air New Zealand operate a broad free-sale codeshare arrangement covering all Tasman sectors and domestic Australian and New Zealand sectors as part of a connecting journey. The commercial aspect of the alliance also covers a revenue sharing agreement.
Reciprocity of loyalty scheme benefits to members of Air New Zealand’s Airpoints loyalty program and Virgin Australia’s Velocity Rewards program are also a feature of the alliance, as is reciprocal lounge access.
Both airlines will now engage with the competition regulator as it moves to finalise its decision over the coming weeks following public comments on its draft determination.
Air New Zealand contends “that in the current market structure, capacity conditions are not necessary to maintain strong competition in the trans-Tasman market and will work with the ACCC to understand its rationale for requiring such conditions and the limited three year authorisation period”.
The alliance also remains subject to approval from the New Zealand Ministry of Transport, with which Air New Zealand and Virgin Australia will continue to work. A decision is expected in a similar timeframe.