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The ACCC has approved Virgin Australia’s unilateral codesharing agreement with Air New Zealand.
The deal, which the ACCC signalled last month that it would allow, will let Virgin place its VA code on trans-Tasman Air New Zealand flights originating and sold in Australia, provided Air New Zealand sets the fares. The consumer watchdog says it believes this will offer passengers more choice.
“We are satisfied that the sharing of resources by these airlines will provide consumers with more ticketing and price options on trans-Tasman routes,” said ACCC deputy chair Mick Keogh.
“Virgin Australia and Air New Zealand will also be able to jointly offer discounts and a range of marketing options to businesses, and eligible Virgin Australia customers will have access to Velocity Frequent Flyer program benefits and international lounge access.”
The codesharing agreement does not apply on routes where Virgin is already competing with Air New Zealand, or on any routes where it decides to compete in future.
“We consider that these conditions significantly limit the potential for the code sharing arrangements to lead to anti-competitive behaviour,” said Keogh.
A Virgin Australia spokesperson welcomed the ACCC’s announcement.
“This is a positive step in the regulatory process and we appreciate the support from the ACCC in our efforts to provide more value and choice to passengers flying across the Tasman,” they said.
“We are still awaiting a decision by the New Zealand Ministry of Transport to finalise our partnership and will provide a further update at the time.”
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 said to 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.”
