The Australian Competition and Consumer Commission (ACCC) has conditionally extended the trans-Tasman alliance between Air New Zealand and Virgin Australia for a further five years.
Both airlines have welcomed the decision, which gives both carriers the ability to codeshare and provide reciprocal frequent flyer benefits to customers through until October 31 2018.
Virgin Australia CEO John Borghetti said: “Since the launch of the Alliance in 2011, Virgin Australia and Air New Zealand have been able to offer consumers a better choice of flights, improved connections and increased capacity on the Tasman. We have also worked together to promote tourism throughout regional Australia and New Zealand.”
Air New Zealand chief strategy, networks and alliances officer Stephen Jones said of the approval: “Authorisation of the alliance… will enable the airlines to continue to improve the customer journey across the Tasman. It will also enable the airlines to continue to leverage efficiencies, opportunities and cost savings on Tasman operations”
The reauthorisation, however, remains subject to approval from the New Zealand Minister of Transport.
The alliance has four key components including a broad free-sale codeshare arrangement covering all Tasman sectors and domestic Australian and New Zealand sectors as part of a connecting journey; revenue sharing; and reciprocal loyalty scheme benefits.
Observing the ACCC authorsation, Holding Redlich’s aviation partner Jeremy Prentice said: “Investment in aviation and aviation services generally involves a longer horizon that two years in order to make an investment worthwhile. The ACCC’s decision on the Air New Zealand-Virgin Australia trans-Tasman alliance provides greater investment certainty and should lead to an improved service offering for travellers.”
Earlier in its deliberations the ACCC had been minded to grant the extension on a two-year basis.
“Integration requirements for tie ups such as the Air New Zealand-Virgin Australia trans-Tasman alliance are complicated. A five-year horizon will be welcomed by both Air New Zealand and Virgin Australia as it supports the level of effort and expense required to deliver a high quality alliance,” Prentice added.