What’s happening with the Virgin Australia / AirNZ partnership?

Former partners Virgin Australia and Air New Zealand are hoping to get back together again, in an alliance which would unlock more seamless travel while boosting the appeal of Virgin’s Velocity frequent flyer program.

Under the rebooted trans-Tasman alliance, passengers would earn Velocity points and status credits on AirNZ flights sporting a VA flight number between Australia and New Zealand, as well as use Velocity points to book those Air New Zealand flights.

The proposal for “a unilateral trans-Tasman codeshare agreement” has already been approved by the Australian Competition and Consumer Commission (ACCC) on a five-year basis – a move which a Virgin Australia spokesperson described as a positive step in efforts to provide “more value and choice to passengers flying across the Tasman.”

ACCC Deputy Chair Mick Keogh said the competition watchdog is satisfied that the pairing will provide “more ticketing and price options on trans-Tasman routes”.

“Virgin Australia and Air New Zealand will also be able to jointly offer discounts and a range of marketing options to businesses, and eligible Virgin Australia customers will have access to Velocity Frequent Flyer program benefits and international lounge access.”

That means Velocity Golds and Platinums, along with members of the invite-only Beyond program, will enjoy access to the Kiwi carrier’s lounges when travelling on VA-coded Air New Zealand flights.

The move would also help fill the holes in Virgin Australia’s NZ network since Virgin abandoned all flights to Aotearoa, except for the popular tourist magnet of Queenstown, to focus on its core domestic services.

However, the ACCC notes this new arrangement does not apply “to routes where Virgin Australia is currently, or decides to start, operating its own services in competition with Air New Zealand,” which at the time of writing are limited to Virgin’s 737 flights from Sydney, Melbourne and Brisbane to Queenstown.

Virgin Australia and Air New Zealand enjoyed a long and deep partnership until October  2018, when the Kiwi carrier pulled out of the alliance over disagreement with Virgin Australia’s direction under then-CEO John Borghetti.

Qantas unexpectedly swooped in to ink a new alliance with the Star Alliance member, although this was restricted to a codeshare on domestic flights within Australia and New Zealand, rather than flights between the two countries; Executive Traveller understands the Qantas-Air New Zealand domestic partnership will not be impacted by this trans-Tasman agreement between Virgin Australia and Air New Zealand.

But will New Zealand give the green light?

But approval for the Virgin/AirNZ alliance must of course come from both sides of the Tasman.

New Zealand’s Ministry of Transport has yet to make a decision on the partnership; Executive Traveller understands the MoT is currently finalising its advice to the Associate Minister of Transport, although there’s no timeline on when we know if this will be thumbs-up or thumbs-down.

Industry body NZ Airports, whose members operate 46 international and domestic airports across New Zealand, is notably opposing the proposed partnership, saying it “sees little justification for authorisation of this codeshare application.”

“The potential benefits for a small part of the travelling public are exceedingly small in comparison to the overall dis-benefits done to the broader trans-Tasman market,” it claims, adding that “a previous agreement between VA and Air NZ that operated between 2010 and 2018 reduced competition. There is no reason this agreement would not have the same impact.”

Similar arguments have been echoed by Auckland and Christchurch airports, with concerns that “the arrangement will reduce Virgin Australia’s motivation to enter the trans-Tasman aviation market.”

“(The agreement) would run counter to the interests of New Zealand consumers who wish to fly trans-Tasman and it would limit potential for growth in capacity and competition on the trans-Tasman routes by removing an incentive for VA to return to flying trans-Tasman (excluding Queenstown) as they did pre-Covid,” says a submission to th NZ MoT filed by Auckland Airport.