A codeshare deal between former foes Qantas and Air New Zealand will shore up their stronghold in the Australian and New Zealand domestic markets and kick Virgin in the guts, according to aviation sources.
The alliance will see Qantas add its QF code to 30 domestic routes in Air NZ’s domestic network, and Air NZ add its prefix to 85 Australian domestic Qantas routes.
However, the deal excludes the trans-Tasman and other international routes, with the two airlines remaining “fierce competitors” in those markets, according to Air NZ chief executive Christopher Luxton.
The arrangement announced in Sydney on Friday promises to offer passengers quicker check-ins, shorter connection times, airport lounge access and, potentially, the ability to earn frequent-flyer points.
But the kinks of the frequent flyer program arrangement have yet to be ironed out before the codeshare starts on October 28 – the same day Air NZ’s relationship with Virgin Australia is due to expire.
Air NZ is a part of the Star Alliance airline network, while Qantas is part of the One World airline alliance.
“We’re working through these details and will have them finalised before the codeshare flights begin on 28 October, 2018,” a Qantas spokesman told The New Daily.
“But it will be no different to other codeshare offers.”
On the same day of the announcement, the share price of Virgin Australia – a former Air NZ ally – closed at $0.225 on the ASX on Friday, a drop of 2.17 per cent.
Virgin Australia reported a $224.7 million loss in 2016 and $185.8 million loss in 2017, according to their 2017 financial report.
The airline was back in the black in the first quarter of the 2017-18 financial year, with an after-tax profit of $4.4 million.
“This will push Virgin into a corner,” Australian Business Traveller editor David Flynn told The New Daily.
“Virgin who was previously a partner with Air NZ, who had Qantas as a shared enemy, has been flipped the other way. This is quite the turnaround.”
Mr Flynn said the deal was “not what Virgin needs right now” and a “shame” given the airline’s contribution to create competition in the Australian airline market.
“Virgin is a good airline, they have good business class, they’re building up their WiFi network, they have good meals, cabins,” Mr Flynn said.
“Qantas has made changes since Virgin has been around, made improvements, and you do have to wonder, would Qantas have taken the initiative?”
Airport security expert Roger Henning echoed the sentiment, telling The New Daily, the deal was a strong move for Qantas and Air NZ and agreed it would be an economic hit on Virgin Australia.
“Frequent flyer programs are the most profitable aspect of the flying business. It’s what keeps airlines in the air and is worth hundreds of millions of dollars.”