Air New Zealand ends alliance with Virgin Australia [goes with Qantas]

[pauly7]

Depressing. But hardly unexpected. Tend to agree that the cost of joining an alliance is something VA simply can not finance right now.

Flights across the Tasman have been at low prices for a few years now, I just don't know how VA can possibly compete and hold their own while facing an even bigger capacity problem from an opponent, making themselves less attractive to high value FFs and losing domestic feed, let alone access to the NZ lounges.

Agree - VA have neither the want or means to join an allowance. Perhaps this latest incident will cause another rethink but boy joining Star would be tough after they have burned both NZ and UA!

VA won’t hold their own, they’ve come out quickly with the Tiger torpedo so as a group they may maintain share but overall will probably lose margin.

I wonder if QF group will do anything, but given they have recently put on huge capacity increases and new routes on TT can’t imagine they will do much more.

 

[Cryptarcadian]

I'm not surprised to hear this, but it's all pretty depressing!

Just got the email from the Air NZ side:

For the past seven years Air New Zealand has been part of a trans-Tasman alliance with Virgin Australia. A lot has changed over that time so we recently undertook a review of this relationship which has resulted in a decision to end the alliance and return to operating independently in the Tasman market with effect from 28 October this year.

Over recent years Air New Zealand has built up a significant presence in Australia which we believe makes this the right time for us to focus on our own strategic objectives. We operate direct to eight Australian cities, and from October we will deliver an improved schedule. We look forward to sharing details of this soon.

We are pleased to be able to serve our customers better and deliver a more consistent customer experience by flying them on our aircraft, with our product offerings and our friendly Kiwi service.

If you wish to travel or are travelling across the Tasman prior to 28 October, there is no change and current alliance conditions and entitlements will apply.

If you already have a booking across the Tasman and your travel is after 28 October, you don’t need to do anything. If you booked direct with Air New Zealand and there are any changes to your flights, we will be in touch in the next few weeks to let you know. If your booking was not made directly with Air New Zealand, then your ticketing agent will be in touch regarding any changes.

...which links to their FAQ:
Travel alerts - Travel alert information - Flight information - Plan | Air New Zealand – Australia

It sounds like NZ will be moving anyone booked on a VA codeshare on an NZ ticket over to a flight on their own metal if it's after 27 Oct. Air NZ sure sound upbeat about it (again, no surprise), but on the other hand there are really no upsides whatsoever for the VA side.

There's no way that VA can match the schedules without NZ, so I see rare opportunities to fly VA to NZ (no, I'm not going to fly TT). So we'll lose all the usual status benefits flying trans-Tasman... not to mention the (ironic, I suppose) quirk that NZ offered us better status recognition than VA themselves ever did!

Aside from the lounge access headaches for VA flights out of SYD/MEL/BNE, the demise of this alliance also means there's definitely no good way to get to South America or many Pacific islands from Australia on VA partners, and the reduced options to North America via AKL hurts too (though this started even before today).

It would appear a cornerstone of VA's build-your-own alliance strategy has been smashed.

 

[juddles]

Without wanting to sound dramatic, this sounds to me like the start of the faster phase of VA's inevitable demise.

Any future wannabe-competitor to QF will have to have a solid alliance (clearly other than one world) FF programs, and likewise global alliances, are "must-haves" in todays new world. In my humble and non-expert opinion.

 

[UP4014]

Wonder about the long term impact on the already haphazard lounge situation

As options reduce, it will become easier for you.

 

[kpc]

Without wanting to sound dramatic, this sounds to me like the start of the faster phase of VA's inevitable demise.

Any future wannabe-competitor to QF will have to have a solid alliance (clearly other than one world) FF programs, and likewise global alliances, are "must-haves" in todays new world. In my humble and non-expert opinion.

We cannot allow VA to fail....we need them to keep Qf competitive and price sensitive. Can you imagine QF without VA keeping it in check?

 

[Must...Fly!]

Without wanting to sound dramatic, this sounds to me like the start of the faster phase of VA's inevitable demise.

Any future wannabe-competitor to QF will have to have a solid alliance (clearly other than one world) FF programs, and likewise global alliances, are "must-haves" in todays new world. In my humble and non-expert opinion.

VA cannot compete against NZ and QF. End of story, no one could imagine a scenario where they make money on the Tasman with that competition (never mind the Chinese carriers etc with the tag flights).

As a VA WP I feel like the loss of NZ recognition beyond NZ was a kick in the shin, this is the kick in the guts, and I just wonder what happens next. Without high frequency and capacity to NZ, I'm not sure what VA hopes to achieve in it's core market. It has failed to make a profit for almost it's entire existence with all the benefits of a huge partnership on arguably the most significant overseas country for any airline flying within Australia. What hope now?

 

[CPMaverick]

Is an expansion of TT to NZ already in the making or just speculation? I couldn't find anything about TT expanding to NZ, but sure are a lot of people mentioning it in this thread.

 

[TheInsider]

Is an expansion of TT to NZ already in the making or just speculation? I couldn't find anything about TT expanding to NZ, but sure are a lot of people mentioning it in this thread.

https://www.asx.com.au/asxpdf/20180404/pdf/43syhnm1l8b10d.pdf
There

 

[arbo]

They do not play nice with the other children and have serious delusions of grandeur about their own pulling power and ability to do it all themselves.

Perhaps they get that from their rugby team

 

[andrewpf]

Without wanting to sound dramatic, this sounds to me like the start of the faster phase of VA's inevitable demise.

Any future wannabe-competitor to QF will have to have a solid alliance (clearly other than one world) FF programs, and likewise global alliances, are "must-haves" in todays new world. In my humble and non-expert opinion.

Wasn't Ansett a member of Star Alliance? That obviously didn't work out too well for them.

Would it perhaps make sense for VA to consolidate its NZ focus on Sydney, Melbourne, Brisbane to Auckland to provide a viable competitive timetable to Air NZ/Qantas on the largest markets (which both fly far more frequently currently than VA does)? Presumably Air NZ is betting that VA won't/can't do that, and instead pull out of the NZ market or maintain current operations, which can't compete from a timetable perspective; while at the same time they are price competitive with Qantas.

 

[CPMaverick]

In my humble opinion, global alliances are outdated. Skyteam is basically a joke and falling apart. Airlines are consistently making partnerships outside their alliances now. DL for example has a stronger partnership with VS and VA than they do with any Skyteam partner they don't own a share of. AA just bought a piece of CZ, an airline in another alliance. Far more airlines codeshare now outside their alliance than before, even when suitable alliance partners are available. All looking for a better deal rather than a seamless alliance experience.

Heavyweights EK and EY don't need an alliance, and neither does VA.

VA do need partners though, and NZ will be hard to replace. Sure seems like NZ will lose a lot too. I feel like it is easier for VA to increase coverage of NZ than for NZ to cover more of Australia. A Trans Tasman fare war will hurt NZ more than VA or QF, in my opinion.

 

[andrewpf]

In my humble opinion, global alliances are outdated. Skyteam is basically a joke and falling apart. Airlines are consistently making partnerships outside their alliances now. DL for example has a stronger partnership with VS and VA than they do with any Skyteam partner they don't own a share of. AA just bought a piece of CZ, an airline in another alliance. Heavyweights EK and EY don't need an alliance, and neither does VA.

VA do need partners though, and NZ will be hard to replace. Sure seems like NZ will lose a lot too. I feel like it is easier for VA to increase coverage of NZ than for NZ to cover more of Australia. A Trans Tasman fare war will hurt NZ more than VA or QF, in my opinion.

Perhaps the calculation is that VA will pull out of the NZ market, or remain a minor presence, leaving an increased duopoly between Air NZ and Qantas? Air NZ presumably has far more financial strength to leverage on a fare war; and can dedicate more of their fleet to the market; although conversely trans-tasman is presumably a much larger chunk of their revenue base.

 

[Deleted member 29185]

That would see trans-tasman flights return to a two horse race for business and non budget travellers - NZ and QF.

Not necessarily. JB has already flagged the TT option and everyone (including VA) knows that TT is a poor option for anyone except the very budget conscious. VA have also previously allowed some concessions for VFF and TT, so I'd be expecting them to revamp the TT model so it is competitive. Many QF status flyers complain about JQ, but still fly them regardless. I think the same can happen for VA and TT. All they'd really have to do is give VFF status holders lounge access off a TT tix and some options to earn VFF SCs and points off TT tix. It works for QF and JQ and we know VA can do this as they already do so in a limited capacity within a strictly constrained routing.

 

[Must...Fly!]

VA do need partners though, and NZ will be hard to replace. Sure seems like NZ will lose a lot too. I feel like it is easier for VA to increase coverage of NZ than for NZ to cover more of Australia. A Trans Tasman fare war will hurt NZ more than VA or QF, in my opinion.

With what aircraft and what money will VA cover more of NZ?

 

[downloadingdata]

Except, you know, VA is not a heavy weight... its basically still a domestic airline relying on partners to fly to international destinations.

 

[cliche_flying_kiwi]

Perhaps they get that from their rugby team

All Blacks have earned that confidence... Air New Zealand, not so much.

Hopefully they've thought this through better than they did the Fly Buys split.

 

[UP4014]

We cannot allow VA to fail....we need them to keep Qf competitive and price sensitive. Can you imagine QF without VA keeping it in check?

I think it's QF keeping VA under pressure not the other way around.

 

[UP4014]

Wasn't Ansett a member of Star Alliance? That obviously didn't work out too well for them.

Star Alliance probably kept them going longer than if they weren't a member. Silly to say Star Alliance didn't work for them, bad management didn't work for them.

 

[CPMaverick]

With what aircraft and what money will VA cover more of NZ?

VA has 737 fleet capable of transferring from domestic to trans-tasman. NZ has a domestic fleet that for the most part can't make that transition.

I didn't say it was simple or easy, just that VA is better placed to cover a smaller country like NZ better than NZ can cover Australia. They can pull a QF and cede smaller domestic routes to TT (like QF did with JQ), and put those planes on the Tasman. NZ can only really trade international for international.

 

[oz_mark]

I think it's QF keeping VA under pressure not the other way around.

Product wise, VA has been applying pressure to QF.

Imagine the state of Business class in Australia if VA hadn't come along...