Air New Zealand and Virgin Blue are seeking regulatory approval for an alliance, with the airlines hoping to challeng Qantas as the dominant force in the region.
The proposed alliance is designed to strengthen the airlines’ competitive offering on trans-Tasman routes, with collaboration on future route and product planning, code sharing and frequent flyer programme benefits also planned.
Air New Zealand and Virgin Blue have had trans-Tasman teams working on the alliance proposal for some months and will now file applications with the Australian Competition and Consumer Commission and the New Zealand Ministry of Transport.
Regulators are expected to take around six months to review the applications prior to authorisation.
Air New Zealand chief executive officer, Rob Fyfe, said the alliance would deliver trans-Tasman travellers cheaper airfares, increased frequency, better connections, loyalty scheme reciprocity and expanded lounge access.
Virgin Blue, Australia’s No. 2 carrier, expects a sales boost of at least A$15 million a year from the accord, chief executive officer Brett Godfrey said on a conference call with journalists.
“A great alliance should deliver great value and consistent product and service standards and that is where we will make new inroads,” added Mr Godfrey.
“We believe we are well matched and the timing is good and incoming Chief Executive, John Borghetti, thoroughly supports this strategy,” he added.
A former Qantas executive, Mr Borghetti was appointed chief executive officer at Virgin Blue earlier this year and is expected to take up his position later this month.
The airlines confirmed, while the proposed alliance is a significant development for both carriers, it will not impact or place restrictions on any existing partnerships or alliances of either airline.
The agreement is also not a signal of intention by Air New Zealand or Virgin Blue to take a shareholding in the other.
Air New Zealand delivers more than 12 million passengers to, from and within New Zealand each year, operating more than 4,000 flights each week and connecting customers to 26 destinations within New Zealand, Australia, the Pacific Islands, China, Japan, Canada, USA and the United Kingdom.
The Australian-based Virgin Blue Airline’s Group includes Virgin Blue, second largest domestic carrier in Australia and short haul international airlines Pacific Blue and joint venture with the Samoan Government, Polynesian Blue.
Together they operate a fleet comprising of 86 modern Boeing 737-NG’s, Boeing 777 and Embraer E-Jet aircraft flying to 31 Australian and 16 international destinations in the South Pacific and Southeast Asia.