Air New Zealand CEO: Virgin Australia alliance is business as usual

By David Flynn , June 7 2016
Air New Zealand CEO: Virgin Australia alliance is business as usual

Air New Zealand CEO Chris Luxon has moved to re-assure travellers that the trans-Tasman alliance between Virgin Australia and Air New Zealand will remain in place despite a messy boardroom bust-up between the two airlines.

“We have a multifaceted relationship with Virgin, and the shareholding has always been very seperate from the alliance” Luxon told Australian Business Traveller at a meeting of Star Alliance airline CEOs in Zurich.

“Both airlines are very committed to the alliance, and we’re really committed to making that work even further.”

The partnership, which helped both carriers take on Qantas on what is Australia's most popular international route, sees Virgin and AirNZ sharing flights between Australia and New Zealand, while also providing select Virgin Australia flyers with access to the Kiwi carrier's lounges and status recognition such as additional luggage allowances and priority check-in and boarding.

Review: Virgin Australia trans-Tasman business class (Sydney-Auckland)

Luxon's comments come as the Kiwi carrier prepares to sell part or all of its 25.9% stake in Virgin Australia.

New Melbourne lounge on the way

Work has just begun on a new Air New Zealand lounge in Melbourne, which will follow the design tenants of the swish Sydney, Brisbane and Auckland lounges.

Luxon expects the Melbourne lounge will be open before the end of this year, “so by the time that’s done we’re in pretty good shape.”

“We’d like to keep looking at what we can in Perth, obviously our services have expanded, but it often depends on what’s going on in the airport master plan environments.”

“We’ve got $100m for lounge upgrades over the next few years” Luxon continues. “We’re about to kick off Fiji and there’s still a lot more to do in domestic New Zealand, so we want to go through our whole network and get all those lounges upgraded.”

Also on the radar is inflight Internet, with AirNZ soon to finalise the specific satellite technology to be used and draw up a rollout schedule for its launch of sky-high WiFi.

Read more: Air New Zealand preps to launch inflight Internet 

David Flynn travelled to Zurich as a guest of Star Alliance

Follow Australian Business Traveller on Twitter – we're @AusBT

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Air New Zealand - NZ*E

17 May 2015

Total posts 94

What more can Mr Luxton say?? Publicly Air NZ must put on a brave face and pretend everything is all is okay but it seems every time they dip their toe in the Australian domestic market someone hacks it off! It does not help that Air NZ no longer have someone on the Virgin board - I don't think we have heard the last of this story... Looks like we have a few more chapters to go?

Air New Zealand - Airpoints

04 Sep 2012

Total posts 136

Well hopefully this is a step closer to a dissolution of the alliance

Virgin Australia - Velocity Rewards

07 Dec 2014

Total posts 164

I am guessing that the New Zealand - Australia market is one of the largest for overseas visitors in both directions.

Since Qantas is Air New Zealand's main competitor on the route, it makes sense that they would retain the alliance with Virgin, and vice verca. 

For Air New Zealand I assume offering onward flights codesharing on Virgin's domestic services is relatively useful given the size of Australia and their large network. Without that, they are at a disadvantage to Qantas. On the flip side, Virgin probably don't have the capital or desire to deploy their own aircraft to compete in the trans-tasman market, and an attempt to become a third major entrant would probably end up just burning cash.

So Virgin and Air New Zealand complement each other in a strategic sense here - commercially my guess is the alliance is advantagous to both airlines, so is obviously a seperate issue to owning shares in the loss making Virgin.

Air New Zealand - NZ*E

17 May 2015

Total posts 94

I agree with everything you say here but the problem is that Air NZ still own a share of Virgin that is now been heavily diluted and there is nothing they can do about it. This investment was made for all the right reasons at the time but the reality is Virgin needs capital and Air NZ is not able (or willing) to provide it so others have stepped up. My view is Air NZ stick to what you do best at and partner with others to access and deliver the parts you can't control. 

Air New Zealand - Airpoints

21 Jan 2016

Total posts 190

I agree with BizTraveller comments, that Air NZ needed to put out the 'business as usual' sign until it sorts out the mess it has created for itself.

As BizTraveller said, the investment was made for the right reasons at the time, as Air NZ needed to have access to Australian domestic routes and Virgin having access to NZ domestic routes after the old Pacific Blue pulled its NZ domestic jet routes, so it made sense to invest into Virgin Australia. Also Air NZ wasn't sure at the time, what SQ intentions where.

Since the investment, Air NZ has patched up its relationship with SQ with an Air NZ/SQ marketing/operating alliance for Asia from NZ.  In essence, it was a good set up for Air NZ/SQ/EY, until Air NZ resigned from the Virgin Australia Board. Had Air NZ not done so, Air NZ would have been privy to the the HNA Group proposal instead of putting Air NZ in the delimma it is currently in. 

Was Air NZ resigning from the Virgin board a good commercial decision. only time will tell.

Air New Zealand - Airpoints

21 Jan 2016

Total posts 190

NZ has sold 19.98% of its shares in VA to Nanshan Group, who owns Qingdao Airlines at 33c per share. NZ is still hasn't decide what it will do with the remaining stake.

Air New Zealand - Airpoints

08 Aug 2014

Total posts 41

Just getting back to the actual topic at hand though - the Air NZ Melbourne lounge, thank goodness something is finally being done about it. What a dog of a lounge the current one is: it's buried down long meandering corridors, is at ground-level so you can see the underside of planes being prepped, and is cavernous and haunted by shrieking overprivileged brats (I'm referring to the offspring of members, although some of them fall into that category too.)  Roll on the new one!


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