The fierce fight for market share on routes in and out of Australasia is set to hot up even further following Air New Zealand's alliance with United Airlines and a new capacity-boosting bilateral between Australia and the UK.

The fledgling partnership of Air New Zealand and Australia's Ansett is now in the process of joining the world's most comprehensive alliance family led by United and Lufthansa.

The move will lift the two Australasian-based carriers into the midst of the global alliance game and strengthen their hand to compete with major rival Qantas and its partner British Airways.

At the same time a new air service agreement between the UK and Australia has opened the door to an Air NZ-Ansett assault on this market on both the traditional routes through Asia and the alternative route via the US.

Qantas and British Airways currently dominate the route through Asia, each operating 14 services a week between Australia and London. Air New Zealand flies to Europe only through the US, while Ansett only flies within Asia. The new bilateral, signed in London in November, is the first increase in capacity since 1990 and allows each side to lift frequencies to 21 weekly by April 1997 and to 28 in April 1998.

More importantly, it provides a substantially liberalised route structure allowing airlines a range of new routes via third countries (bilaterals permitting) and to points in Europe, and for the first time enables Australian carriers to codeshare via the US.

The deal is a major breakthrough for Ansett, which is expected to extend its current pact with United to codesharing to, within and possibly beyond the US: United already codeshares with Ansett domestically in Australia.

Rival Qantas operates codeshare services to the US with American Airlines, and while the carrier is not interested in operating through services to the UK, approval of the AA-BA alliance could see it codeshare to Europe via the US.

The new bilateral also clears the way for Australian and UK carriers to codeshare over multiple points in Asia, depending on local bilateral limitations.

The alliance between Air NZ and United will initially see the two carriers codeshare on 84 weekly flights, including Sydney to Auckland, San Francisco and Los Angeles and Auckland-Honolulu. The number of codeshares could rise to 200 per week, with coverage extending to points in the South Pacific and beyond gateway US cities.

Sources suggest pacts with Lufthansa and Thai may follow. Ansett, which already has a commercial agreement with the US operator and with Lufthansa, will also be strengthening its alliance ties in line with Air NZ, as the pair coordinate their international networks.

Meanwhile bilateral talks between Australia and Singapore are expected to lead to an agreement on increased capacity early in 1997. Key issues to be finalised are the extent of the capacity increases, codesharing and more beyond rights for Australian carriers through Singapore. The talks are important to Qantas/BA because the pair cannot at present codeshare over Singapore, leaving a gap in their strategy.

But Singapore and the UK will also have to agree a new bilateral to allow Qantas and BA to codeshare. Sources at Singapore Airlines say the carrier will use this leverage to push for transatlantic fifth freedom rights to the US over London in return.


Source: Airline Business