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

[Must...Fly!]

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.

I disagree. NZ has plenty of scope to deploy capacity and widebodies in to Australia and have the financial reserves to survive a long and sustained price war. Virgin has absolutely none of those advantages. NZ have plenty of scope to add widebodies to destinations previously served primarily through the VA partnership. They've made this decision because they can go on their own quite happily and serve all the destinations they want. Clearly they think they can do better on their own.

 

[henrus]

They're a bit stuck if they want to serve other more regional destinations without the help of Qantas or Virgin though...

 

[TomVexille]

They're a bit stuck if they want to serve other more regional destinations without the help of Qantas or Virgin though...

Nothing to stop them throwing some Q300s into regional routes if they wanted.

Not that I think they will, as there can't be enough in it for them.

 

[Standby]

if VA want to act rationally from a business perspective they need to focus on where their profit pool is largest.
That’s clearly the Aust market.They can negotiate inter line agreements that undercut QF for Aust connecting pax with any number of carriers
I assume they are getting good feed from partners like DL,SQ,EY and other carriers like AC and their Chinese owners.they have squandered hulls on the Tasman that in the AU market would have built the network and frequency that drive revenue and allows expansion of lounges plus that actually wins business account share.instead of walking away from the Tasman and focus on building their dom network they shrunk the regional options handing business back to their main foe..They have missed the point in what delivers a strong sustainable business.They have a strong( in number terms) FF scheme.They should have a profit pool equal to their capacity,given their cost advantage over QF.Those who have allowed this to occur aren’t being held accountable as a broadly traded public company would have by now.Its a great shame for the company and its staff as well as Australian consumers.All isn’t lost as they have a product many like but serious refocusing in the leadership team is required

 

[arbo]

Interesting to ponder what NZ have in mind with Australian domestic connections. Probably still maintain a codeshare on VA.

On the flip side I'd like to know what VA's plans are for domestic NZ travel. I'm one of many that do SYD - AKL (or MEL - AKL etc) and then tag on to regional travel with Air NZ.

Getting SC and Lounge access on the regional NZ travel has always been a postive benefit for all the time I spend there. Having to revert back to soley VA only for SYD - AKL will also be a pain as I preferred the NZ metal between SYD & AKL as always a better experience

 

[AustraliaPoochie]

I will still fly (Air)NZ as they have flights direct from AKL to ADL, but I won't be earning any miles directly, can still earn by booking flights on (Air)NZ with Flybuys travel, and those Flybuys points can still be transferred to VFF, but at a smaller scale.
QF decided to can direct international flights from ADL anyway, on all except that JQ flight to DPS.
Bypassing SYD/MEL/BNE now has to be the way, and no more lounge access, while a downside, that 787 wide window view though is an attractant in my case.

 

[grubbidok]

instead of walking away from the Tasman and focus on building their dom network they shrunk the regional options handing business back to their main foe.

I agree that more than the NZ issue their domestic business is the major concern. Routes like SYD-MKY and SYD-ROK (both always busy when I flew - I now know people in MKY who have sworn off VA and moved back to QF due to VA's "betrayal" on dropping these routes) and their extensive WA operations gave them some unique point-of difference options QF didn't have, but they squandered them. They had a nice little regional network and then gave it to QQ (under contract yes, but why not retain Virgin branding on those?). They seem to be shrinking their destinations (in Oz), rather than expanding them.

That being said, losing NZ is a kick in the guts for sure. There's no way to sugar-coat it. If it was a one-off you could dismiss it or shake it off. But these kicks are coming with depressing regularity lately.

 

[Deleted member 29185]

I will still fly (Air)NZ as they have flights direct from AKL to ADL, but I won't be earning any miles directly, ...
Bypassing SYD/MEL/BNE now has to be the way, .

So the direct flight is the most important factor or are the fares/experience far better as well.

I don't realty know (as I've never needed to), but given these changes, wouldn't VA with connections in MEL, SYD or BNE be better for point/SC earn, assuming you want to stick with VFF, or are the prices too dear?

 

[dajop]

I will still fly (Air)NZ as they have flights direct from AKL to ADL, but I won't be earning any miles directly, can still earn by booking flights on (Air)NZ with Flybuys travel, and those Flybuys points can still be transferred to VFF, but at a smaller scale.

If the fare is points earning you could also earn Velocity points by crediting to Krisflyer (SQ) and then transferring to Velocity at some point

 

[TheInsider]

On the flip side I'd like to know what VA's plans are for domestic NZ travel. I'm one of many that do SYD - AKL (or MEL - AKL etc) and then tag on to regional travel with Air NZ.

Codesharing is stopping, along with the frequent flyer benefits. Interline bookings haven't stopped, and i'm sure you'll still be able to book regional travel into Aust and also into NZ with VA and NZ.

 

[Mattg]

I'm a tad worried that for Dunedin, VA's reaction will be to can the flight. BNE-DUD is the only scheduled international flight arriving/departing from DUD, so if the ACCC determination putting a floor on BNE-DUD capacity isn't there, there may be less incentive in keeping the customs/immigration running.

Is maintaining a service to Dunedin a condition of the ACCC approval? If so, I would be very surprised to see VA still flying there by the end of this year.

FWIW, I flew BNE-DUD last year. It was a Friday night, so I would have thought the flight would be close to full. Nope, around 50% full at most and J was almost empty.

 

[pauly7]

Instead of walking away from the Tasman and focus on building their dom network they shrunk the regional options handing business back to their main foe..

They have missed the point in what delivers a strong sustainable business.

They have a strong( in number terms) FF scheme.

They should have a profit pool equal to their capacity,given their cost advantage over QF.

Those who have allowed this to occur aren’t being held accountable as a broadly traded public company would have by now.Its a great shame for the company and its staff as well as Australian consumers.

All isn’t lost as they have a product many like but serious refocusing in the leadership team is required

Although a little off topic there certainly is a lot of talk about the poor corporate stewardship of VA and the lack of accountability. Their free float on the ASX is about 7% which is a joke they should just delist and become a Chinese dominated privately owned business.

Pretty much every foray outside of being a solid domestic mainline carrier has failed or been a very niche offering and still we have the same leadership.

Back on topic though, you are dead right all is not lost because their domestic operation is still strong. I think they will suffer through lack of fleet flexibility to counter a nimble QF but I strongly suspect that Tiger will be ramped up and integrated more a la early days of Jetstar before QF ramped up again to fill the hole

 

[Mattg]

I see that VA is still selling NZ codeshare flights on its website for travel after 28 October. I wonder how long it will take for them to remove these flights from sale?

 

[Must...Fly!]

I actually think from a business perspective they have one-up on QF, in that the cost of TT is not in any way variable. They don't have to consider lounge access. For QF, the lounges are already there and it becomes a business cost pretty easily. But for VA this would be of prime concern, as they don't have their own lounges available in Sydney or Brisbane. Melbourne is arguable, but a poor experience - they only have this the terminal is co-located, and you have to stress through security before getting to the aircraft (who knows how long it will take).

HOWEVER if they are serious about retaining traffic to NZ and making it work, they have to do the following in my opinion;
a) Offer competitive fares
b) Offer competitive connections. I don't mind flying via SYD or BNE if I have to, to get to my destination in NZ - but make sure I'm not penalised heavily for doing so
c) If TT pick up the slack, then give lounge access & ability to earn points & SC on trans-Tasman travel *only*

The biggest issue now is that right now one has a choice of 5-7 daily flights MEL-AKL, for example. 3-5 of these are NZ metal. It gets worse when you look at the smaller cities. The only advantage VA have here is firm orders for 737MAX, and a significant number of 737NG which are on lease or owned. They should be easily extended at competitive rates, if required, for use by either TT or VA. But to highlight again - if they're serious about keeping their traffic, then they absolutely need to make sure they treat HVGs the same as Qantas.

Otherwise why would anyone bother flying Tiger, when they have Jetstar and a lovely lounge next door. Neither have a domestic option once you get to NZ that is particularly attractive, so they don't have to fight for that market in my opinion.

 

[AustraliaPoochie]

If the fare is points earning you could also earn Velocity points by crediting to Krisflyer (SQ) and then transferring to Velocity at some point

Aye, there is that way.
But its a long hard slog to earn the points and SC as we currently do.
Add your suggestion to paying for the trip via Flybuys travel, mmm, 3 things to do to earn the points,
1.book the flight on Flybuys travel.
2.pay with a visa that earns velocity points
3.palm off the points earnings to SQ and then transfer back those KF points to VFF
Hard slog, but some will see this as worth it, I am sure.
Thanks for the tip about putting points via KF first though.
Edit: (off topic question though), how many points (minimum) must a person have in KF before they can transfer it to VFF? And what is the transfer blocks like, 5k?

 

[NZflygirl]

So the direct flight is the most important factor or are the fares/experience far better as well.

I don't realty know (as I've never needed to), but given these changes, wouldn't VA with connections in MEL, SYD or BNE be better for point/SC earn, assuming you want to stick with VFF, or are the prices too dear?

It's a pain in the backside transiting BNE & SYD. MEL not so bad but it's such a short flight to MEL. I flew NZ AKL-ADL on the dreamliner and it was so nice not transiting. It's just of a length where transiting feels like overkill. PE is good as well which neither VA or QF provide.
Had to fly QF back as that's what my partners work had booked and man it was painful transiting SYD!! If there's one airport you're likely to end up sprinting for your plane it's Sydney! Seemed a few flights were delayed that day and that was the only reason we made our flight. Adelaide is just too short. If you're after sc then yes you could fly to several airports prior to crossing the ditch. I think the experience on NZ's direct flight is better. I don't mind Y either.

I would like to keep lounge access and some benefits via the NZ FFP (and vice versa) but will have to wait and see. I see reciprocity as being beneficial to both FFPs.

 

[henrus]

Is maintaining a service to Dunedin a condition of the ACCC approval? If so, I would be very surprised to see VA still flying there by the end of this year.

There were actually six routes they were required to maintain a minimum number of services:
Brisbane to Christchurch.
Brisbane to Dunedin.
Brisbane to Wellington.
Brisbane to Queenstown.
Melbourne to Christchurch.
Gold Coast to Auckland.

 

[Warks]

This just arrived:

Important Service Message
We are writing to advise that Virgin Australia Group and Air New Zealand will not be continuing their strategic alliance partnership between Australia and New Zealand.

We’re currently working through with Air New Zealand what this means for you, however please note there will be no impact for Velocity members booked for travel on either airline between Australia and New Zealand up until at least 27 October, 2018 (inclusive).

Velocity members travelling on Air New Zealand services up to this date will still be eligible to earn Velocity Points and Status Credits and access Air New Zealand premium customer benefits, where applicable. Redemption tickets on Air New Zealand-operated flights issued prior to 27 October 2018 for travel after this date will be unaffected.

We are working to minimise disruption for all members and we will be in touch in the coming weeks with further information, including details for travel from October 2018.

Velocity Frequent Flyer

So the salient point being that you can still book reward flights up to 27 October this year. I've got flights booked for December already and I didn't think they would be affected but at least they've given some dates.

 

[henrus]

So the salient point being that you can still book reward flights up to 27 October this year. I've got flights booked for December already and I didn't think they would be affected but at least they've given some dates.

Yep because by booking NZ operated award flights you've always been booked on the NZ flight number (this isn't the case for VA operated NZ sold awards using Airpoints).

The main point is that the codeshare deal approved by the ACCC expires in October but after that time the airlines are free to offer benefits or flights that are marketed by the operating carrier if they wish. Whilst I highly doubt that full benefits will continue there are suggestions from some that perks for VA Members flying Domestically within NZ will continue and vice versa.

Whilst these sort of things take time you'd think they'd hurry up, currently, for dates after 28 October, it's only possible to book flights from Regional Australia to Regional NZ on Qantas (who also sell NZ operated regional flights).

 

[docjames]

Is maintaining a service to Dunedin a condition of the ACCC approval? If so, I would be very surprised to see VA still flying there by the end of this year.

FWIW, I flew BNE-DUD last year. It was a Friday night, so I would have thought the flight would be close to full. Nope, around 50% full at most and J was almost empty.

DUD is pretty seasonal. So I can imagine times where it’s 100% and times where its <50%.