Interesting Announcement by DJ [Virgin Blue / Air New Zealand alliance]

[docjames]

Released by VBA to the ASX.

In response to media speculation today, Virgin Blue confirmed that it has been in
discussions with Air New Zealand over several months regarding commercial
co-operation on Trans Tasman markets.
Under the company's continuous disclosure obligations, should any transaction be​

completed, the airline would promptly inform the market

Thoughts? Presume it'll be a plan to build a complimentary network in some way/shape/form.

 

[dajop]

Released by VBA to the ASX.



Thoughts? Presume it'll be a plan to build a complimentary network in some way/shape/form.

Not surprising, given the nature of the competition the two airlines face in the TT market against QF/JQ and to a lesser extent EK, and NZ's move into the DJ space with their new approach to the market.

 

[SeaWolf]

And to think, just days ago I commented that I thought Air NZ would be an obstacle to Virgin Blue joining Star Alliance. Guess I was way off the mark.

 

[harvyk]

I do wonder how long it'll be before DJ join an alliance... (I'm going to say when rather than if given the current direction DJ appear to be going).

I wonder if we will see a domestic star alliance carrier (to fill the AN gap) in AU before too long???

 

[wtolmie]

I would have thought they'd be a better chance of joining Skymiles with Delta ?

 

[SeaWolf]

I think it would be a huge benefit to Virgin Blue and other Star Alliance carriers. DJ would get a heap of interline traffic on its regional routes for passengers connecting to international flights on *A carriers and *A carriers would get that regional network they lost with the collapse of AN.

Also, it'd help Velocity get a serious edge over QFF. More routes, more airlines, more choices.

I think that DJs current IT systems are probably a large blocking factor and one that's expensive, difficult and time consuming to overcome. Also, there might other requirements to join *A that DJ doesn't meet, however given *A recent changes in direction and desire to expand the alliance I don't think that would be an obstacle.

 

[SeaWolf]

I would have thought they'd be a better chance of joining Skymiles with Delta ?

I honestly think the chances of joining SkyTeam are slim, even after the current arrangement with Delta. There's barely any SkyTeam services into Australia, especially weighed against oneworld and Star Alliance. It'd leave Virgin Blue as a sort of 'SkyTeam island', virtually cut off from the rest of the alliance except for a few small bridges.

 

[wtolmie]

I honestly think the chances of joining SkyTeam are slim, even after the current arrangement with Delta. There's barely any SkyTeam services into Australia, especially weighed against oneworld and Star Alliance. It'd leave Virgin Blue as a sort of 'SkyTeam island', virtually cut off from the rest of the alliance except for a few small bridges.

True.. either way, doesnt bother me.. call me a prude, but im a strict Oneworld Fan !!

 

[dajop]

I honestly think the chances of joining SkyTeam are slim, even after the current arrangement with Delta. There's barely any SkyTeam services into Australia, especially weighed against oneworld and Star Alliance. It'd leave Virgin Blue as a sort of 'SkyTeam island', virtually cut off from the rest of the alliance except for a few small bridges.

It would I suspect benefit V Australia more to be part of skyteam, in that ultimately it could fill some of the gaps in the skyteam network. As for Virgin Blue it is would likely benefit more from star alliance.

Undoubtedly star alliance coverage of Australia is significant, with SQ, NZ, TG, OZ, CA, AC, UA, CO, SA all having a presence - in fact they have more international services combined to/from non SYD ports than oneworld does. So plenty of feeder traffic for DJ there.

Skyteam really only covers MEL/SYD through China Southern, Korean and Delta, and soon Vietnam Airlines (Garuda membership, as mooted for 2011 would encompass other cities as well obviously). SO not a lot of direct feed, but then the lack of coverage also provides feed to DJ - as people can't take direct flights.

Of course let's not forget the global Virgin alliance!

 

[haydensydney]

I am praying for *A representation in Australia - it would such a great move and would be quite the shakeup for QF and OW.

Did anyone else see the news today?

Air New Zealand beats Qantas in customer satisfaction

 

[docjames]

Thanks all for the interesting comments so far.

Thought of a few other things - VB does have 'V Pacific" Trademarked and recently accepted in NZ.

ATMOSS - Australian Trade Mark Online Search System


Wonder if Virgin Pacific may be changing names to align with V Australia. Note also reports of recent increase in advertising of V Aus flights to LAX via SYD/MEL/BNE from NZ.

Putting 1+1+1 together and getting 6 and a half, but would seem V Pacific is definitely being considered as an option. Whether this is independent of, or tied-up with, the NZ deal reamins to be seen.


A more boring option is that DJ/NZ are just going to share ground services etc.....

 

[notzac]

A reasonably in-depth read on the topic here:
Virgin Blue-Air New Zealand “cooperation”. A game-changer - perhaps | Centre for Asia Pacific Aviation - CAPA

 

[docjames]

A reasonably in-depth read on the topic here:
Virgin Blue-Air New Zealand “cooperation”. A game-changer - perhaps | Centre for Asia Pacific Aviation - CAPA

Great article. Thanks for posting.

One thinks the prospect of NZ and DJ joinging skyteam would massively strengthen that alliance in SWP/Aus, but there's no way NZ would leave *A in any hurry of course.

Interesting.

 

[dk4]

IMO the key "opportunity/threat" behind talks is - the impending "domestic arrival processing" for Tasman flights, something completely overlooked in that article!

Perhaps we can assume that joint (AU-NZ governmental agency) pre-departure international processing will allow, at the very least, Tasman flights to arrive into domestic terminals (leaving aside any guessing about which terminal from which they will depart), if Air NZ wants to take advantage of this at Australian terminals (and lets face it, its two major competitors are ready on both sides of the Tasman) it needs a new strategy for Australian Arrivals.




So some of the options are –

• Set up new handling arrangements at Australian domestic, common-user-terminals. Of course this will be an incremental cost on top of their existing Australian ground operations.
• Partner with an existing domestic airline to better mange the transition to domestic arrivals into Australia.
• Disembark their passengers as a “D” domestic cleared passengers into the existing International terminals infrastructure/processes.

Okay, lets examine these three options –

From Air NZ perspective – Virgin Blue & Jetstar [/Qantas Group] have domestic operations at all the current Tasman-arrival Australian International Airports. There will be little cost for THEM transitioning to domestic arrivals into Australia. PLUS, it will be a BIG customer draw card; there are numerous customer benefits to arriving into an Australian Domestic Terminal vs arriving into an International Terminal as a “D” passenger. Streamlined domestic terminal arrivals will offer a great competitive advantage over airlines which do not move from International Terminal Arrivals. E.g. Emirates, LAN etc.

From A Virgin Blue perspective – If Air NZ is forced to move into ground handling contracts at Australian Domestic Common User Terminals, they would be very worried that Air NZ would want to capitalise on these incremental investment costs and start domestic services in its own right on key domestic routes, to recoup the outlay.

So, option number two (as above) becomes quite interesting... now add on all the other synergistic reasons for a partnership, and the option becomes quite compelling.

 

[harvyk]

I know they keep talking about making trans tasman flights "Domestic"... But I don't see that happening any time soon...

Let's take Europe for example... You can drive (or walk) between countries, and there are even cities which are right on the border, where immigration between those two countries would be a major hassel (think having to go through immigration to go the next suburb over). As far as I know however it's only between countries where the lack of formal procedures gives a significant time saving... The UK still has it's own border protection (last I heard it was not part of Schengen Area), and the english channel is much narrower than the tasman.

Between as far as I know AU and NZ, the quickest the average person on a commercial flight can get from one country and another is 2:55 (BNE - AKL), with some flights considered long haul by AirNZ (AKL-PER is 7:45). It's not like the average person just "pop's over the tasman for the afternoon", where as in Europe, it's quite doable and very easy now there is the Schengen Area.

Back on topic, I doubt AirNZ would leave *A, to suit DJ. DJ is more likely to join *A than join ST. Think about it, QF has codeshare agreements with airlines outside of OW, SA and AF spring to mind. No reason why DJ can't continue having agreements with DL and yet join *A with AirNZ...

 

[dajop]

I know they keep talking about making trans tasman flights "Domestic"... But I don't see that happening any time soon...

Was the talk about making them domestic or more about making them akin to the Canada/US situation where travelling from Canada to US, you pre-clear US immigration at the departure port rather than clearing after the flight at the arrival port, thus the aircraft just docks into the airline's regular (or what we would call domestic) terminal on arrival.

 

[samh004]

So they’ll make some interline agreements, work more closely; both will benefit and produce some real competition to QF/JQ; DJ will be helped into *A by ANZ, and ANZ will invest some money into them and start to control them; then in a few years, ANZ will steal all their money and DJ will collapse, while ANZ profits greatly again

I do think this would be good for DJ though, I don’t see the point in Pacific Blue if they just interline with ANZ metal, but Trans-Tasman flight could then at least have Koru Club access for Silver and Gold.

 

[harvyk]

Was the talk about making them domestic or more about making them akin to the Canada/US situation where travelling from Canada to US, you pre-clear US immigration at the departure port rather than clearing after the flight at the arrival port, thus the aircraft just docks into the airline's regular (or what we would call domestic) terminal on arrival.

The talk was about making them domestic, you fly say from SYD T3 and land at AKL Dom. No immigration, no AQIS \ MAF, and no Customs. (And I doubt there will still be Duty Free )...

They already are starting down the path of "pre-clearance" like the US \ Canada situation. Where you start the process off in AKL, AU has a smart gate kiosk in AKL, thus it's possible to get the entry ticket prior to leaving NZ. Haven't seen the NZ kiosks here yet, but I'm sure that's going to change sooner rather than later.

The thing I'm curious to know is how long before AirNZ books you on DJ instead of QF for domestic AU flights? Right now if you book say CBR - AKL (or AKL - CBR which is one I have done with AirNZ) they book you onto QF metal for the dom flights.

 

[samh004]

The thing I'm curious to know is how long before AirNZ books you on DJ instead of QF for domestic AU flights? Right now if you book say CBR - AKL (or AKL - CBR which is one I have done with AirNZ) they book you onto QF metal for the dom flights.

Well they must have an agreement with Qf, as you can book BNE - ZQN for example on QF and they’ll suggest the AKL - ZQN sector could be on ANZ sometimes. If they stopped routing onto QF, QF would likely do the same to them in NZ. So are they getting any value out of those routings?

 

[harvyk]

Well they must have an agreement with Qf, as you can book BNE - ZQN for example on QF and they’ll suggest the AKL - ZQN sector could be on ANZ sometimes. If they stopped routing onto QF, QF would likely do the same to them in NZ. So are they getting any value out of those routings?

Yeah your right. Just did a dummy QF booking SYD - ZQN vv, they have direct flights, they also give options with routing via AKL, and then doing the AKL - ZQN segments on AirNZ. Coming back they have a direct flight, a JQ option, and yet they still also give the AirNZ option via the QF website.