In April we saw Air New Zealand announce that they were not renewing their 7-year strategic alliance with Virgin Australia.

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Air New Zealand Chief Revenue Officer Cam Wallace says market dynamics on the Tasman have changed and the time is now right for each airline to focus on its 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.

“We remain fully committed to our other alliance relationships and our overall global airline alliance strategy as a critical success factor in other markets.”

The increase in flights and new routes:

After the announcement, we have seen both airlines announce increased services and new routes across the Tasman. Air New Zealand will be flying from Queenstown (NZ) to Brisbane (Australia) four times a week. They will be operating five flights per week between Wellington (NZ) to Brisbane.

In addition to the new routes, Air New Zealand is adding significant extra trans-Tasman capacity into and out of Christchurch from 28 October 2018. This includes moving to double daily on peak days of the week to both Melbourne and Brisbane. They will also fly double daily from Monday to Friday to Sydney. This represents a 15 percent increase in capacity or about 35,000 extra seats on Christchurch trans-Tasman routes alone.

Air New Zealand will also offer 125,000 additional trans-Tasman seats ex Auckland. This will include a new business timed morning flight to Melbourne, more evening flights to Brisbane. And also a new middle of the day flight to Sydney.

Virgin Australia will start up to five flights a week between Sydney and Wellington, as well as up to four flights a week between Melbourne and Queenstown. It will also fly between Auckland and Newcastle over summer.

Air New Zealand and Qantas

Two months after the announcement of the alliance cut. Air New Zealand has announced a new codeshare deal with Virgin Australia’s main competitor in Australia, Qantas. Both Air New Zealand and Qantas will be codesharing on a variety of both airlines domestic routes in their home countries. This alliance will start on October 28th, the day after their alliance with Virgin ends.

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Qantas Group CEO Alan Joyce said the two national carriers had a lot of shared history as well as a shared goal of making travel easier.

“Our relationship with Air New Zealand goes back almost 80 years. We’ve been partners at various stages over that time and we have a lot of respect for them as a competitor.

“A codeshare deal on our domestic networks makes sense for customers because it leverages the strengths we each have in our home markets.”

Air New Zealand Chief Executive Officer Christopher Luxon said the codeshare will see two of the world’s best airlines offer their customers a full-service experience when they make domestic connections within New Zealand or Australia.

“While the two airlines will continue to compete very strongly across all markets. Air New Zealand and Qantas are known for having a commitment to innovation, customer service excellence, operational performance and safety. We are confident that our respective customers will enjoy the reciprocal benefits on both sides of the Tasman.”

The two CEOs noted that over time there was potential for them to explore areas of mutual interest, including research into biofuels, freight and ground-handling opportunities.

Air NZ Tier Match

The Kiwi airline’s ‘Touch of Gold’ promotion is limited to residents of Australia and New Zealand. There is no doubt it is another salvo in the stoush between Air NZ and former-beau-turned-foe Virgin Australia. It’s a generous status match, running for six months instead of the usual three. It includes a ‘status challenge’ component to extend your newly-minted Gold status to a full year.

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The Touch of Gold status match gifts you six months of gratis status at Air New Zealand’s Airpoints Gold tier, which is equivalent to Star Alliance Gold. The Touch of Gold promotion also comes with the option to extend your Airpoints Gold status. If you earn just 450 status points instead of the usual 900. As soon as your Touch of Gold application is approved your Airpoints account will sprout an instant 450 status points. This puts you halfway towards the 900 status points usually needed to earn or retain Gold.

Clearly, this status match campaign is another dig at Virgin Australia, as Air New Zealand is wanting to rob Virgin of their most frequent fliers.

The Possibility of Tigerair

Virgin Australia has hinted in them bringing their fully owned low-cost carrier Tigerair Australia across the Tasman. This would add a second low-cost carrier into the fiery Trans-Tasman war, along with Jetstar. This would make all other airlines fighting for passengers across the Tasman struggle to maintain their current pricing schemes. This may also see foreign carriers like LATAM, AirAsia X and Emirates reduce their Tasman services.

Currently both Air New Zealand and Virgin have a 52% share of the Trans-Tasman market. Though Air NZ has twice the capacity of Virgin. So Virgin would need TigerAir to help their share as both airlines are adding around 15% more seats after the breakup.

 

Overall both Air New Zealand and Virgin Australia have made some big hits at each other for their alliance breakup. Both airlines are adding 15% more seats across the Tasman. So Virgin has hinted at bringing their low-cost arm Tigerair Australia into the fiery Trans-Tasman market. Air New Zealand has already announced a new alliance with Virgin’s main competitor Qantas. This is on both airlines domestic routes, which starts a day after they end their 7-year alliance with Virgin.

It will be interesting to watch what happens with the Trans-Tasman market, and we will have to wait and see if any of the airlines make any more hits against the other in the next few weeks.

 

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