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The ACCC has indicated it will not stand in the way of a proposal for Virgin Australia to sell codeshare tickets on Air New Zealand’s trans-Tasman flights.
The competition watchdog is seeking submissions on its draft determination, which would allow Virgin to sell an unlimited number of tickets under its code on Air New Zealand flights sold and originating in Australia, up to available capacity, provided that Air New Zealand sets the fares.
“This proposed code sharing arrangement has the potential to increase ticketing choices for Australians travelling to New Zealand, and provide Velocity frequent flyer program benefits and international lounge access for eligible Virgin Australia customers,” said ACCC deputy chair Mick Keogh.
Virgin Australia currently operates its own flights to Queenstown from Sydney, Melbourne and Brisbane, which are not affected by the proposed arrangements; the codeshare will also not apply to any future trans-Tasman services Virgin launches in competition with Air New Zealand.
“We consider it unlikely that any significant increase in passenger demand for trans-Tasman services due to this code sharing arrangement would raise airfares,” said Keogh.
“On current information, we also consider that the code sharing arrangements do not materially reduce Virgin Australia’s incentive to operate its own services on other trans-Tasman routes.”
Virgin and Air New Zealand will be permitted to jointly provide marketing offers, including discounts, for VA-coded trans-Tasman Air New Zealand services, and can immediately start planning on how they will sell and market these fares.
“The interim authorisation excludes the direct or indirect marketing, provision of offers and sale of fares to all customers before the ACCC makes its final determination,” said Keogh.
Virgin Australia and Air New Zealand previously had a strategic alliance in the mid-2010s, which involved a metal-neutral, revenue-sharing joint venture on trans-Tasman routes, as well as reciprocal frequent flyer benefits.
The deal was terminated by Air New Zealand in 2018, with the Kiwi carrier then announcing a codeshare deal with Qantas where it would add its code to Qantas domestic flights it did not serve in Australia, and vice versa in New Zealand.
Then Virgin Australia CEO John Borghetti raised concerns about the deal with the ACCC, saying it would be bad for customers.
“On a standalone basis you read it and you look at it and you say it doesn’t really make sense so flick the page,” Borghetti told delegates at the CAPA – Centre for Aviation Aviation and Corporate Travel Summit. “What’s part two here, because this can’t be the whole story?”
“I believe there could be a part two and I think that would be more worrisome for competition on the Tasman. We’ve made some comments about that formally through regulators and we will continue to make them.”
Submissions on the draft determination are open until 8 May.
