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Air NZ, Virgin Blue get green light from Joyce for alliance

Air NZ, Virgin Blue get green light from Joyce for trans-Tasman alliance

Dec. 21 (BusinessDesk) – Air New Zealand and Virgin Blue have won approval from Transport Minister Steven Joyce to cooperate on routes across the Tasman Sea.

The decision follows approval being granted by Australia’s antitrust regulator this month, reversing its preliminary view, after the two airlines gave guarantees on growth in capacity. Joyce was also swayed by their commitment to maintain passenger numbers on the Tasman, according to his statement.

The two airlines will code share on Tasman and connecting domestic flights and offer reciprocal frequent flyer and lounge access agreements. Their alliance was in response to Qantas Airways Ltd.’s two-airline strategy where its low-fare Jetstar unit operates domestically in New Zealand and links to longer-haul flights on its parent.

Shares of Air NZ rose 0.7% to $1.50 on the NZX and Virgin Blue rose 1.1% to 45.5 Australian cents on the ASX.

Joyce said other airlines on the Tasman “will continue to provide strong competition for the alliance on most routes within and between both Australia and New Zealand.”

He authorised the alliance for a period of three years and said the time limit “will place a strong incentive on the two airlines to operate in a competitive manner.”

“How Air New Zealand and Virgin Blue implement the alliance, as well as the state of the market, will be taken into account in deciding whether further authorisation is given,” he said.

(BusinessDesk)

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