Qantas-Virgin dispute over Italy rights goes to the heart of the new alliance partnerships

Virgin Australia and Qantas are squaring off over a limited number of codeshare seats available for use with third airlines between Australia and Italy, setting the stage for a looming battle for Europe. The Italian dispute goes to the strategic heart of the alliances created between the two Australian carriers and their Middle East and Asian counterparts.

Qantas currently holds the entire 1,000 weekly codeshare seats available under the air services agreement between the two countries. But with an expanding virtual European network through partners Etihad and Singapore Airlines, Virgin Australia is gunning for its share to keep up with the proposed Qantas-Emirates mega-alliance to Italy.

Qantas has reapplied for renewal of the entire capacity which until now it has used in conjunction with Cathay Pacific over Hong Kong and British Airways via Singapore and London, arguing that as the incumbent it has first rights. But Virgin Australia believes it is entitled to a commercially viable share as a new Australian airline entrant on the route.