Air NZ and Virgin Australia: Tasman capacity to surge

Air New Zealand and Virgin Australia have both unveiled plans to add capacity in the Australia-New Zealand market after their joint venture ends on 27-Oct-2018. The two airlines will compete against each other on 11 cross-Tasman routes following the launch of two new routes for each airline.

The Air New Zealand-Virgin Australia JV covers 20 routes and accounted for a 52% share of the Australia-New Zealand market in FY2017. Air New Zealand has more than twice as much capacity as Virgin Australia and should be able to maintain this gap as both airlines add approximately 15% capacity following their divorce.

The Qantas Group, the only other main competitor in the Australia-New Zealand market, will lose market share unless it also decides to pursue strategic expansion. Qantas has already expanded capacity to New Zealand by approximately 25% to fill the void left by three cross-Tasman route suspensions by its partner Emirates.