Virgin Blue and Air New Zealand move towards alliance

Virgin Blue Airlines Group (including Pacific Blue and Polynesian Blue) and Air New Zealand are in discussions over collaboration on trans-Tasman services.

The proposed alliance will connect regional centres in Australia and New Zealand but only as part of a Tasman journey – it does not include domestic-only travel in either Australia or New Zealand. The agreement, according to both parties, is also not a signal of intention by Air New Zealand or Virgin Blue to take a shareholding in the other.

“We are two of the world’s most innovative and nimble airlines and by working closer together we believe we can deliver significant benefits to customers and shareholders,” remarked ANZ’s CEO Rob Fyfe. “Our alliance is about working closely together to give customers cheaper fares, increased frequency and better connections, while delivering improved returns.

“Simple moves like integrating schedules and capacity, allowing customers to book multi-sector journeys on one code, providing reciprocal loyalty scheme benefits and reciprocal lounge access for qualifying customers will be a compelling proposition for leisure and business travellers on both sides of the Tasman,” Fyfe added, noting that the number of seats flown on the Tasman by the alliance carriers would grow more quickly than they would without the alliance.

“By combining our New Zealand customer base with the strong market presence that Virgin Blue has in Australia, additional flights and new routes will make sense much more quickly. Also, the ability to offer Air New Zealand codeshare flights to domestic destinations in Australia, and Virgin Blue codeshare flights to regional destinations in New Zealand as part of connecting Tasman journeys will be a great benefit to our frequent flyers and a boost for tourism in both countries,” Fyfe noted.

The proposed agreement will have four key components:
1. A broad free-sale codeshare arrangement (involving both airlines selling tickets for each other’s flights under its own airline code) covering
• all Tasman sectors currently operated by either airline;
• domestic Australian sectors as part of a connecting Tasman journey; and
• domestic New Zealand sectors as part of a connecting Tasman journey
2. A revenue allocation agreement under which:
• revenue generated across all Tasman sectors currently operated by either airline, or which may be developed under the agreement, will be allocated between the two carriers; and
• a joint trans-Tasman network planning & revenue management team representing both airlines will oversee the Tasman operation
3. A frequent flyer co-operation agreement that will provide reciprocal loyalty scheme benefits to members of Air New Zealand’s Airpoints loyalty programme and Virgin Blue’s Velocity Rewards programme.
4. A lounge co-operation agreement that will ensure lounge access to qualifying guests of either airline.

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