The Australian Competition and Consumer Commission (ACCC) issued a preliminary approval for Virgin Australia and Air New Zealand’s bid for unilateral code-sharing arrangements on trans-Tasman routes.
This codeshare agreement will allow Virgin Australia passengers to access an unlimited number of seats on Air New Zealand, subject to availability.
Both airlines are requesting permission for Virgin Australia to set its airline code on a free sale basis on trans-Tasman routes operated by Air New Zealand.
The authorisation is subject to the condition that Air New Zealand determines the fares at which Virgin Australia may market and resupply these services to customers.
The proposal will not include routes where Virgin Australia operates its own trans-Tasman services nor any routes that compete with Air New Zealand. This includes routes between Queenstown in New Zealand and Melbourne, Sydney, and Brisbane.
“This proposed code sharing arrangement has the potential to increase ticketing choices for Australians travelling to New Zealand, and provide Velocity frequent flyer program benefits and international lounge access for eligible Virgin Australia customers,” ACCC Deputy Chair Mick Keogh said.
Mr. Keogh considers the potential boost in airfare prices, as demand for Air New Zealand flights rises, unlikely.
He also assures that the code sharing arrangements will not discourage Virgin Australia from operating its flights on other trans-Tasman routes.
“On current information, we also consider that the code sharing arrangements do not materially reduce Virgin Australia’s incentive to operate its own services on other trans-Tasman routes,” Mr. Keogh said.
The ACCC also extends the interim authorisation to the commercial planning, discussions, and other necessary preparatory steps for the marketing and selling of fares for Virgin Australia’s trans-Tasman services.
“The interim authorisation excludes the direct or indirect marketing, provision of offers and sale of fares to all customers before the ACCC makes its final determination,” Mr. Keogh said.
This avoids confusing customers and limits any issues that may violate Australian Consumer Law, should the code share arrangement fall apart.
Through the approval of the codeshare arrangements, the ACCC acknowledges the potential to reap public benefits such as increased choice and convenience for trans-Tasman travellers as well as better loyalty program benefits and international lounge access for Virgin Australia customers.
“A fantastic outcome after months of hard work across both teams. Stay tuned for a raft of new benefits for Velocity Frequent Flyer members flying to New Zealand as our partnership comes to life,” Henry Coles, Head of Airline Partnerships at Virgin Australia Group, said.
Both airlines claim that the proposed conduct will promote competition by enabling Virgin Australia to widen its network offer and elicit a competitive response from other trans-Tasman operators.
However, the ACCC counters that there is currently no sufficient information that guarantees these results.
Virgin Australia and Air New Zealand lodged the application for authorisation on Nov. 17, 2023. Clarifications on the proposed conduct were later added on April 15.
A draft determination was published in an interim report on May 1, which seeks to authorise the proposed cooperation of the two airlines. Before reaching a final decision, the ACCC is awaiting feedback on the interim authorisation by May 8.
If fully approved, the ACCC will grant a five-year authorisation period for the airlines.
Virgin Australia currently operates long-haul international flight services on non-reciprocal codeshare arrangements with various airlines.
These include Qatar Airways, United Airlines, Singapore Airlines, Hawaiian Airlines, All Nippon Airline, and Air Canada. The partner airlines impose ticket prices in Australia.
