Virgin Australia and Air New Zealand will end their seven-year old alliance on transtasman services on 27 October when their existing regulatory approval expires.
Air NZ’s chief revenue officer Cam Wallace says that the decision to not pursue a new approval reflects the changing dynamics on the Tasman market, which have made it more appropriate for each airline to focus on their own objectives.
“Australia is the largest source of inbound visitors to New Zealand and Air New Zealand has built up a significant presence in this market. This move will enable us to deliver a more consistent customer experience by using our own fleet and delivering an improved schedule, which we’ll provide more details about shortly,” he adds.
The end of the alliance follows Air NZ sale of its remaining shares in Virgin Australia last year to China’s Nanshan Group. The Star Alliance had previously been the largest shareholder in Virgin, with its stake peaking at 26% in 2014, however it started to sell down its stake to Nanshan in 2016.
Wallace adds that Air NZ remains "fully committed to our other alliance relationships and our overall global airline alliance strategy as a critical success factor in other markets."
Virgin chief executive John Borghetti says that ending the alliance provides new opportunities for the group, “including operating both the Virgin Australia and Tigerair Australia brands in the market.”
“Virgin Australia will continue its strong focus on providing competition and outstanding service on the Tasman, which remains an important part of our network and strategy as an airline group,” he adds.
In the past few months, the rival alliance between Qantas and Emirates that serves the same market has rebalanced capacity between the two airlines. That has seen Emirates end a number of its transtasman tag flights between Australia’s east coast and Auckland, while Qantas has added Airbus A330s to some of its services to New Zealand.
FlightGlobal schedules show that Air NZ is the largest competitor on the transtasman market, and this month will operate around 34% of its seats. That is followed by Qantas with 27% of seats, while Virgin is in third place with a seat share of 16%.