Air New Zealand has terminated its trans-Tasman alliance with Virgin Australia. The surprise announcement marks the end of an 8-year partnership between the Kiwi carrier and Virgin Australia.
Air New Zealand’s alliance with Virgin Australia will end on 28 October 2018. From this date, Virgin Australia customers will no longer be able to book Air New Zealand codeshare flights and will no longer earn Velocity points or status credits on Air New Zealand services. Velocity Frequent Flyer members will also lose access to Air New Zealand’s lounges and the ability to redeem Velocity points for Air New Zealand flights.
Air New Zealand cited “changed market dynamics” across the Tasman in its decision to terminate the alliance. It seems Air New Zealand believes it is now well-placed to serve the trans-Tasman market on its own. But the airline’s customers will lose access to Virgin Australia’s regional network across Australia, covering destinations like Canberra, Hobart, Newcastle and Darwin.
I think AirNZ imagines they have enough strength in their own brand and fleet to go it alone, particularly with *A. But I wonder if this is a bad move for them as VA would provide feeder passengers from regional destinations who are heading to NZ for holidays etc.
Meanwhile, Virgin Australia loses the ability to codeshare on Air New Zealand’s services to regional destinations in New Zealand. But perhaps more significantly, Virgin loses access to Air New Zealand’s trans-Tasman services. This is a big deal because Air New Zealand currently offers more routes, more seats and higher frequencies across the Tasman than Virgin Australia.
In January 2018, the most recent month for which data is available, Air New Zealand operated 314,689 seats between Australia and New Zealand. 78% of these seats were occupied. But Virgin Australia operated just 149,338 seats across the Tasman, filling 75% of these seats. The loss of Air New Zealand codeshares leaves Virgin Australia in a relatively uncompetitive position across the Tasman. Virgin will lack the network and frequency that it is currently able to offer jointly with Air New Zealand. But Virgin has hinted that the end of the Air New Zealand alliance could pave the way for Tigerair to start operating to New Zealand.
One thing in Virgin Australia’s favour is that it has a much better frequent flyer program than Air New Zealand. It is unlikely that loyal Velocity members will want to jump ship to Air New Zealand, which has one of the world’s worst frequent flyer programs.
Pity, but this may backfire on NZ. I cannot see Velocity members rushing to NZ as the Airpoints program is absolute rubbish.
Velocity members will still be worse-off overall without access to reciprocal frequent flyer benefits with Air New Zealand. The loss of the Air New Zealand alliance leaves Virgin Australia without a partner in New Zealand, one of Australia’s most important international markets. Some AFF members believe this just reinforces the need for Virgin Australia to join a global alliance such as Star Alliance.
I know it’s beating on a dead horse, but it would be great if this will finally encourage VA to join a proper alliance, even Skyteam would be good.
As Virgin Australia does not operate its own international lounges, Velocity members can currently access Air New Zealand’s lounges when flying across the Tasman or within New Zealand. These arrangements will almost certainly change from 28 October, although Virgin has not yet released details.
Sad news… I primarily maintain VA status for access to NZ lounges in NZ…. I guess it is back to QF I go…
Yeah quite unfortunate as the Air NZ lounges are terrific. A shame for anyone who flies regularly across the Tasman.
Access to Air New Zealand lounges when flying with Virgin or Air New Zealand is also currently a benefit of Virgin Australia lounge membership. It remains to be seen whether Virgin will make alternative arrangements or reduce its lounge membership fees to compensate.
Virgin’s Air New Zealand alliance has already been on shaky ground for some time. Virgin has already stopped offering reciprocal benefits to Velocity members on Air New Zealand’s flights to the Americas.
Virgin and Air New Zealand customers with affected bookings for travel after 28 October 2018 will be contacted in the coming weeks.
Join the discussion on the Australian Frequent Flyer forum: Air New Zealand ends codeshare alliance with Virgin Australia
