The relationship between Air New Zealand and Virgin Blue is getting cosier, with the Kiwi flag-carrier taking up a 14.9% shareholding stake in Virgin Blue.
Air New Zealand chief executive Rob Fyfe describes the investment "as part of Air New Zealand's strategy to develop scale and reach in this region", with last month's trans-Tasman alliance with Virgin Blue being "the first step in this strategy."
The 14.9% stake, estimated to have cost AirNZ A$145m, is a whisker under the maximum 14.99% permitted by Australia's Foreign Investment Review Board (Virgin Blue’s largest shareholder is UK parent Virgin Group with 26%). But Fyfe says the airline has no intention of making a full takeover of Virgin Blue.
"The investment provides us with an interest in the number two airline in Australia and, through this, access to the opportunities in the growing Australian domestic market" Fyfe explains. "Air New Zealand has no intention of entering the Australian domestic market in its own right. (Our) investment in Virgin Blue reinforces Air New Zealand's strategy to grow its business in Australasia, which is continually evolving as a single aviation market."
Air New Zealand continues to raise the stakes on both a regional and international level. The carrier has invested heavily in new aircraft including four Boeing 777-300ERs and its own design for cabin and seating, especially for premium economy and business class, which made their debut on flights to Melbourne and Brisbane last week.
AirNZ is also the launch customer for Boeing's much-delayed 787-9 Dreamliner with eight of the $218m next-gen jetliner on the books, although Boeing has yet to set a delivery date for the first of these.
The trans-Tasman partnership with Virgin Blue will tap into Australia's most popular international route, which as of October 2010 saw a total of 2.1 million passengers per year shuttling between Auckland and Sydney, Melbourne and Brisbane, or 11.5% of Australia's total international passenger movements. Air New Zealand has also signed a codeshare agreement with Virgin Atlantic.
About David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.