Australia's Virgin Blue and Qantas Airways hope in the next three months either to start up or boost their presence in New Zealand, but their plans depend on the ruling of the competition authorities on the proposed merger between Qantas and Air New Zealand (ANZ).

Qantas plans to launch Jet Connect, a low-cost New Zealand subsidiary, in September. Using the Qantas livery, Jet Connect will take over most Qantas New Zealand-Australia flights, except for Auckland-Sydney. The Qantas subsidiary, created in 2001, is recruiting 14 pilots and 25 flight attendants. They will be Jet Connect employees under lower-cost contracts than with Qantas. All aircraft will be based in New Zealand.

Separately, Canberra has granted Virgin Blue authority to launch New Zealand flights, with October the expected launch date. Virgin also gained routes to Fiji and Vanuatu, two Pacific island tourist destinations. As allowed under the Australia-New Zealand open skies bilateral, Virgin Blue acquired unlimited capacity to New Zealand. Its next move may be to ask Wellington for cabotage rights, also allowed under the bilateral.

Virgin Blue faces a branding issue. When Singapore Airlines (SIA) bought a stake in Virgin Atlantic, part of that 1999 deal was that the Virgin name would not be used internationally without SIA's permission, so far not granted.

The move by Qantas toward lower-cost Australia-New Zealand flights parallels ANZ's plan to extend its lower-cost Express Class service, a domestic success, to short international routes sometime later this year. Some analysts predict, however, that if regulators approve the Qantas-ANZ merger, Qantas may withdraw all flights within New Zealand and scale back New Zealand-Australia flights in favour of those operated by ANZ.

Virgin Blue's plans depend even more on the proposed merger. Initially it said it would not enter New Zealand if that merger was approved. Then it said entry was dependent on ANZ shutting down its discount unit, Freedom Air, which ANZ insists it will not do. Virgin now says the amount of capacity it commits and any decision about internal New Zealand flights will depend on what happens to the merger. Australian and New Zealand regulators both ruled preliminarily against it in April, but have received more submissions and reserved final decisions until August or September.


Source: Airline Business