Following Air New Zealand’s split from its strategic alliance with Virgin Australia, Air New Zealand is launching two new routes across the Tasman. These new plans come off the bat of Air New Zealand ending a seven-year partnership with Virgin Australia.
The two new routes are from Queenstown to Brisbane and Wellington to Brisbane. On top of this, they are adding a 15% seat capacity overall to their transtasman services, with an extra 125,000 going from Auckland to Australian destinations.The seven-year deal will expire in October, marking the official end of the alliance.
“Ultimately, we do believe that we service our customers better in an adjacent market with our own aircraft, our own staff, our own product.” Air New Zealand’s chief revenue officer said about the split.
Australia is the largest source of inbound visitors to New Zealand, and so Air New Zealand had built a presence in the Australian market.
Air New Zealand had previously bought a 26% stake in Virgin Australia, as a way of gaining greater control over Virgin and cutting into the gains of their big Australian rival, Qantas. However, Air New Zealand was quickly frustrated with their efforts to knock off Qantas, and Virgin Australia was not achieving the highly profitable returns that both Air New Zealand and Qantas were. In 2016, Air New Zealand gave up on and sold its shares in the company. Despite that, the expectations were still that Air New Zealand would resign their Alliance with Virgin.
Virgin Australia was also not holding its tongue about the matter.
”Our willingness and strength is to be as competitive as possible on any route whether it be on the Tasman or anywhere else,” CEO of Virgin Australia, John Borghetti, said.
In retaliation, Virgin Australia is threatening to spread its wings over here in New Zealand, possibly expanding its low-cost subsidiary Tigerair to fly over on this side of the horizon.
There is a real potential for reduced price flights between New Zealand and Australia due to the increased competition, which is promising for consumers.