SIA, Air New Zealand see alliances as strategic imperatives

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Singapore Airlines (SIA) and Air New Zealand say alliances are a cornerstone of their respective business strategies.

Speaking at a press conference in Singapore following the announcement of a major partnership, the chief executives of both companies lauded the attributes of alliances.

“The three key pillars for SIA’s operations are product leadership, service excellence, and network connectivity,” says SIA chief executive Goh Choon Phong.

“Within network connectivity, this involves our own organic growth and at [unit] Silkair, and also alliances with key partners. [The Air New Zealand relationship] is certainly one of those key partnerships, which we see as an important part of our strategy to extend our network connectivity for our customers.”

The agreement, which the two carriers first started talking about in 2013, will see SIA and Air New Zealand enter a code and revenue sharing arrangement. Citing confidentiality issues, the executives declined to give details about the mechanism involved in the sharing of revenue.

“In 12 months both carriers will be doing better than either of us would have been doing individually,” says Air New Zealand chief executive Christopher Luxon.

“From our point of view alliances are important to build sustainable commercial services to link New Zealand to the world, and both of us can leverage our sales and distribution strengths at both ends of the route. This is why an alliance driven network makes very good sense commercially. “

Under the proposed alliance, Singapore Airlines would upgauge one of its daily Singapore-Auckland services to an Airbus A380 aircraft from the Boeing 777-300ER it now uses on the route.

Air New Zealand would take over five of SIA’s weekly Auckland-Singapore services using its recently re-fitted 777-200ERs. It would also add two additional flights, giving ANZ daily services to Singapore. Luxon says that the 787-9s it will begin taking delivery of this summer could eventually be deployed on the Singapore route.

Air New Zealand passengers will be able to transfer onto SIA flights for destinations in Southeast Asia and Europe, while SIA passengers arriving in New Zealand will be able to transfer to Air New Zealand’s domestic network, as well as destinations in the Pacific.

The deal, however, does not include SIA destinations such as Hong Kong or in China, because these are covered through Air New Zealand’s alliance with Cathay Pacific.

Luxon says that the Cathay Pacific relationship still stands, but that there is no scope for growth owing Air New Zealand’s being a member of Star Alliance, while Cathay is a member of Oneworld.

In addition, Air New Zealand will not, initially, be able to place its code on SIA and Silkair destinations in India. The air services agreement between New Zealand and India precludes third party codeshares, although Luxon says New Delhi and Wellington are working to revise this.

The SIA and Air New Zealand tie-up is subject to regulatory approvals, but the two Star Alliance carriers hope to eventually increase capacity between Singapore and New Zealand by up to 30% annually.