Air NZ, Virgin Blue alliance wins over Australia’s antitrust regulator; shares gain
Dec. 16 (BusinessDesk) – Air New Zealand and Virgin Blue have convinced Australia’s antitrust regulator to reverse its preliminary view and approve their alliance on trans-Tasman routes. Shares of both airlines rose on the news.
In response to intense competition on the Tasman, the two airlines have agreed to code share on Tasman and connecting domestic flights and offer reciprocal frequent flyer and lounge access agreements
They first mooted the tie-up in May, 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.
The Australian Competition & Consumer Commission rejected the proposal in its draft determination issued in September and reversed its position after Air NZ and Virgin providing guarantees on capacity growth, Air NZ chief executive Rob Fyfe said in a statement today.
"I'm pleased that formal approval has been given recognising the benefits this will bring to our customers," Fyfe said.
The Auckland-based airline expects a decision on its alliance application to New Zealand Transport Minister Steven Joyce in the next few days.
Air New Zealand climbed 2.8% to $1.47 on the NZX and Virgin Blue rose 4.7% to 45 cents on the ASX.