Almost a year ago, Air New Zealand spectacularly ended its long-term partnership with Virgin Australia. Following the end of October 2018, the two airlines once again became competitors on trans-Tasman flights while Air New Zealand got into bed with Virgin’s rival, Qantas.
Looking back, it seems the divorce has worked out much better for Air New Zealand and Qantas. Virgin Australia, on the other hand, has been struggling to fill its flights to New Zealand and make a profit ever since.
One Year On: Air New Zealand vs Virgin Australia
We did some analysis and found that Virgin Australia – despite adding more flights and routes across the Tasman – has really been struggling.
After the divorce between Air New Zealand and Virgin Australia last year, both airlines made concerted efforts to lure customers. Virgin Australia changed to a full-service model across the Tasman, with complimentary bags, meals and even in-flight wifi for all passengers. It added new routes like Sydney-Wellington, Melbourne-Queenstown and Newcastle-Auckland, and ran a lengthy double status credits promotion which only applied to New Zealand services. The airline also opened a new lounge at Wellington Airport… although this lounge hasn’t exactly received rave reviews.
So, how has this worked out? We compared BITRE data for the year prior to the Virgin/Air NZ divorce (November 2017 to October 2018) with data from after the divorce until the most recent month for which stats are available, which is currently June 2019. The purple line in the graph below signifies the end date of the partnership. As you can see, both Air New Zealand and Virgin Australia have slightly increased trans-Tasman capacity since the changes.
However, while Air New Zealand has more or less managed to maintain its load factors (or percentage of seats filled), Virgin’s have plummeted. In November 2018, Virgin filled just 67.3% of seats between Australia and New Zealand compared to 77.3% in October 2018 and 81% in the previous November. And things haven’t got much better from there – Virgin’s load factors are still hovering in the mid-60s while Air New Zealand is averaging around 80% – about on par with Qantas.
We know that Virgin Australia is currently losing a lot of money, and its loss-making international operations are a big part of that. Virgin is now in the process of reviewing its route network, and with the airline already having cut Sydney-Christchurch back to a limited seasonal service, more cuts could now be on the way.
Admittedly, Air New Zealand does offer many more onward connections from New Zealand than Virgin Australia. With Air New Zealand, you can connect with one stop from 8 Australian cities via Auckland to almost anywhere in New Zealand, the Pacific Islands and the Americas. On the other hand, Virgin Australia offers onward connections from Auckland to Rarotonga or Nuku’alofa… and that’s about it.
Qantas makes the most money on Trans-Tasman flights
According to this informative article by Anna.aero, Qantas generates the highest average airfare on the Sydney-Auckland route by some margin. Qantas earns an average of $304 per passenger on this route, while Air New Zealand gets $264 and Virgin Australia’s average fare is reportedly just $216.
This means that the average round-trip airfare from Sydney to Auckland on Qantas is $176 higher than on Virgin Australia. This is partly due to Qantas having more Business class seats on its aircraft – between 12 and 28 Business seats, compared to Virgin’s 8 seats. Qantas also has a wider choice of flight times, with around double the frequency of Virgin. But this does also reflect the fact that the flying public, on average, is prepared to pay a premium to fly Qantas over Virgin Australia (and other airlines on the route, too).
The Anna.aero article also points out that there is now less competition between Australia and New Zealand than a few years ago. Air Asia X pulled out of the market earlier this year, and Emirates withdrew all of its A380 flights from Melbourne, Sydney and Brisbane to Auckland recently. Meanwhile, LATAM Airlines will reduce its frequency on the Sydney-Auckland route from daily to 4x weekly next month. Despite this, Virgin Australia is still performing poorly.
Interestingly, Emirates reportedly filled just 44% of seats on its Sydney-Christchurch flights in the last month for which data is available. This is the last remaining Emirates fifth-freedom route across the Tasman.
Which airline do you prefer to fly to New Zealand?
For AFF member Berlin, who flies in Business Class between Australia and New Zealand almost every week, Emirates is a clear favourite followed by LATAM Airlines. Air New Zealand and Qantas also score reasonably well, but Virgin Australia is this member’s least favourite airline by a surprisingly large margin.
I will still regularly select Qantas due to their Frequent Flyer scheme and the amazing lounges in Sydney and Melbourne but as soon as I have renewed my Platinum status for the year, would rather chose AirNZ if I was paying outright (as I mostly do). Finally, last and certainly also least is Virgin Australia, what an outright disaster this airline is!
You can read Berlin‘s very detailed comments and thoughts on the Australian Frequent Flyer forum: A tale of 4 (formerly 5) airlines
Each airline has its strengths and weaknesses, and everyone has their own personal preferences. Who do you prefer flying across the Tasman? Let us know in the comments below!