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Virgin Blue eyes global network with approval for Etihad, Air New Zealand JVs

17-Dec-2010 9:08 AM

Virgin Blue Group of Airlines CEO and Managing Director John Borgetti welcomed (16-Dec-2010) separate decisions by the Australian Competition and Consumer Commission (ACCC) to approve its commercial partnerships with Etihad Airways and Air New Zealand. Mr Borghetti said the decisions are great news for consumers and for Australian tourism as it moves to build a second Australian international airline. He added the approval of the partnerships is a key step in implementing the company’s strategy of building an international network with global coverage to complement Virgin Blue’s core domestic business. 

  • Etihad alliance: Virgin Blue Group’s partnership with Etihad Airways will deliver a combined global network of more than 100 destinations worldwide. V Australia will commence three times weekly direct Sydney-Abu Dhabi service in Feb-2011 and three times weekly Brisbane-Abu Dhabi service by Feb-2012 - see Route Changes Table for more information.
    • Etihad Airways also welcomed the ACCC draft decision on its alliance with Virgin Blue (WAM, 17-Dec-2010). CEO James Hogan stated the alliance will “promote competition and generate benefits for travellers”.
  • Air New Zealand trans-Tasman alliance: Mr Borghetti said the ACCC’s approval paves the way for Virgin Blue to provide a competitive offering to corporate as well as leisure travellers in the region. He declined to provide an estimate on how much revenue will be boosted by the alliance, but stated it would not have an impact on earnings until next financial year (The Age, 17-Dec-2010). 
    • The group operates 70 flights each week from Sydney, Melbourne Tullamarine, Brisbane and Cairns to Auckland, Christchurch, Dunedin, Hamilton and Wellington as well as seasonal flights from Sydney to Queenstown with its B737 fleet. These services represent more than 25,000 seats each week. The trans-Tasman alliance covers three areas of cooperation:
      • A broad free-sale codeshare arrangement covering all Tasman sectors and domestic sectors forming part of a connecting Tasman journey;
      • A revenue allocation agreement supported by a joint trans-Tasman Network Planning and Revenue Management Team;
      • A reciprocal frequent flyer and lounge access agreement.
    • New Zealand Minister for Transport Steven Joyce is expected to also approve the alliance. Air New Zealand CEO Rob Fyfe stated he expects a decision from Mr Joyce, who has still to approve the alliance, by the end of this week (NZ Herald, 17-Dec-2010).[more]
    • Wellington Airport, one of the parties that made a submission expressing concerns at the alliance, welcomed (16-Dec-2010) the ACCC's recognition for the need to ensure that growth on trans-Tasman flights to the capital will not be threatened. Under its approval of the alliance, the ACCC has imposed a number of conditions, requiring the airlines to maintain and grow the number of seats flown on the routes where the ACCC has identified competition issues, including to/from Wellington. The airport stated the proposal is hugely significant to the region as Air New Zealand and Pacific Blue represent 60% of the region’s trans-Tasman capacity between them. If approved by Mr Joyce, it will result in alliance capacity growth of more than a 10% spread across Wellington’s trans-Tasman routes, more than 50,000 extra seats in time for the Rugby World Cup. [more]
  • Other Virgin alliances: Virgin is now awaiting a final decision from US regulators on its proposed trans-Pacific alliance with Delta Air Lines, to be made early in 2011. Mr Borghetti stated the carrier will also focus on finding an Asian alliance partner in 2H2011.

Virgin Blue: “We are extremely pleased that the way is now cleared for us to create a truly global airline that not only offers a great product and service but also greater frequencies and great value for money fares. These are truly game-changing alliances,” John Borgetti, CEO and Managing Director. Source: Virgin Blue, 16-Dec-2010. 

Wellington Airport: “The alliance will bring with it a number of potential benefits to consumers, but as it was initially proposed it also presented a threat to frequency of services and airfares on routes with limited competition. The Wellington region was an active participant in highlighting these concerns and it is reassuring to see that the ACCC has protected growth on routes to our city by specifying minimum capacity conditions for Wellington services. Subject to the approval of the New Zealand regulators, we look forward to working with the alliance partners to develop additional services above the minimum capacity requirements. We have identified a number of compelling growth opportunities which we expect will be of interest to the unified trans-Tasman operation,” Steven Fitzgerald, CEO. Source: Wellington Airport, 16-Dec-2010.