It’s common for airlines to have partnerships of all kinds with one another, ranging from interline agreements, to codeshare agreements, to joint ventures. Virgin Australia and Air New Zealand have just rolled out a partnership, and what makes it unique is that it’s one-sided.
In this post:
Virgin Australia partners on Air New Zealand flights
Virgin Australia and Air New Zealand will be launching a codeshare agreement on trans-Tasman routes, between Australia and New Zealand. However, we’ll exclusively see Virgin Australia codeshare on Air New Zealand’s services, and not the other way around.
Under this agreement, Virgin Australia customers will be able to directly book Air New Zealand flights between Australia and Auckland (AKL), Christchurch (CHC), and Wellington (WLG), through Virgin Australia channels. Virgin Australia Velocity members will also be able to earn and redeem Velocity points, and eligible members and guests will have access to lounges when flying between the countries.
What do Air New Zealand flyers get? Well, absolutely nothing. For what it’s worth, Virgin Australia’s only service to New Zealand is to Queenstown (ZQN), and that service is excluded from this agreement.
Virgin Australia’s Chief Strategy and Transformation Officer, Alistair Hartley, claims this partnership will give Virgin Australia customers access to a comprehensive network between Australia and New Zealand:
“Australians share our love of New Zealand and its national carrier and we can’t wait to reignite this partnership before the end of the year. The regulators’ endorsement reflects the strong consumer benefits the partnership will unlock, including greater value, choice and loyalty rewards for travellers across the Tasman.”
Meanwhile Air New Zealand’s Chief Transformation and Alliances Officer, Mike Williams, says this partnership will make it easier for Australians to travel to New Zealand:
“We know our Aussie friends are a travel-hungry bunch, so whether it’s just a quick weekend trip to catch up with family or wanting to explore more of New Zealand, this partnership provides further options for more Australians to visit beautiful Aotearoa. We look forward to welcoming Virgin Australia customers onboard, offering them our exceptional Kiwi service, including food, our great selection of New Zealand wines, and our crew’s famous Manaaki (care).”
The interesting dynamics at play with this partnership
I find the background of this situation to be quite interesting, especially since Australia and New Zealand aren’t exactly the most competitive aviation markets (understandably, given the fairly small populations).
The first thing to understand is why this partnership is so limited. The codeshare agreement could only get regulatory approval if it didn’t reduce competition. This means that Air New Zealand still sets the prices for its flights, and on top of that, the airlines can only codeshare in markets where they don’t compete. So if Virgin Australia ever started flights to the three New Zealand cities included in this agreement, then the partnership would have to be pulled.
This also isn’t the first time that the two airlines have partnered. Until 2018, Virgin Australia and Air New Zealand had an extensive partnership. However, due to disagreements between the airlines, the partnership was pulled, and then Air New Zealand and Qantas launched a partnership.
The partnership between Air New Zealand and Qantas exclusively covered flights within each country, meaning Air New Zealand international passengers could connect onto Qantas domestic flights in Australia, and Qantas international passengers could connect onto Air New Zealand domestic flights in New Zealand.
Now Air New Zealand will be able to partner with both Virgin Australia and Qantas, but in different markets. Ultimately that seems fair enough, as this arrangement won’t reduce competition.
Bottom line
Virgin Australia and Air New Zealand have launched a new partnership, whereby Virgin Australia is able to codeshare on some Air New Zealand flights between the two countries, with frequent flyers being able to earn and redeem points, and take advantage of elite perks.
This seems like a sensible partnership. I find it noteworthy, because it’s not often you see a unilateral agreement like this.
What do you make of this new partnership?
I will never understand why the regulators approve code shares. They stifle competition on routes where airlines code share, which seems to be proven in this case, as apparently they can only code share on routes where they do not compete. Case in point, Virgin and Air NZ can't code share on the Queenstown route because the regulators determined it would stifle competition, and should Virgin decide to fly into say, Christchurch, then this code...
I will never understand why the regulators approve code shares. They stifle competition on routes where airlines code share, which seems to be proven in this case, as apparently they can only code share on routes where they do not compete. Case in point, Virgin and Air NZ can't code share on the Queenstown route because the regulators determined it would stifle competition, and should Virgin decide to fly into say, Christchurch, then this code share arrangement would have to cease. Why? Because it would stifle competition on that route.
The only benefit to travelers with code share arrangements is that you can book domestic connecting flights, very rarely is there any competition on the fares. Have seen the same with QANTAS - Emirates code share.
There are other benefits to this for travellers. For example, VA FF will now earn points on those flights, whereas they would have no option to earn points if taking a flight on that route prior. Similarly, those with status will get benefits of that status in making that booking, whereas again before, no benefits would be received without the codeshare.
VA used to be partnered with NZ. I flew on a VA booking on NZ metal across the ditch around 2014. Back then, I believe that if you bought the ticket through VA, you were booking via the low-cost channel (which got you lower fares, but came with steep checked bag fees, something like $95 AUD per checked bag. Overhead was/is limited to a very paultry 7kg (~15lb) (https://www.airnewzealand.com/baggage-help).
The IFE was used to order...
VA used to be partnered with NZ. I flew on a VA booking on NZ metal across the ditch around 2014. Back then, I believe that if you bought the ticket through VA, you were booking via the low-cost channel (which got you lower fares, but came with steep checked bag fees, something like $95 AUD per checked bag. Overhead was/is limited to a very paultry 7kg (~15lb) (https://www.airnewzealand.com/baggage-help).
The IFE was used to order food, beverage, amenity kits etc. I believe the IFEs of the VA bookers was programmed to allow for fewer free drink options and no free snack options vs. the NZ bookers.
Its VA expanding its network to compete with QF.
This seems to be a "Tick and Flick" type of unilateral partnership so that Virgin Australia can state "they serve New Zealand" through their upcoming one-way Air NZ partnership.
However it's a sensible decision financially for Virgin considering their history of financial losses operating on the Tasman on their own aircraft (even back when they operated the services as the old JV with Air NZ), as the new one-way partnership puts 100% of the...
This seems to be a "Tick and Flick" type of unilateral partnership so that Virgin Australia can state "they serve New Zealand" through their upcoming one-way Air NZ partnership.
However it's a sensible decision financially for Virgin considering their history of financial losses operating on the Tasman on their own aircraft (even back when they operated the services as the old JV with Air NZ), as the new one-way partnership puts 100% of the operating risk on NZ and is a partnership that's barely 1 step above a simple interline agreement.
I suspect it more than being able to make a claim. If you want to fly Perth, Adelaide, Hobart, or a non-capital city to CHC or WLG, you'll need to connect in SYD or MEL. VA can now sell you an ticket on VA to get you there. One flight on VA and one on NZ listed as a VA flight. Consumers like that.