🗞️ACCC's Draft Decision Allows Virgin Australia-Air New Zealand Codeshare

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The ACCC has released a draft decision that would allow Virgin Australia and Air New Zealand to share codes on trans-Tasman routes without any other airlines' permission.Air New Zealand and Virgin Australia want to get permission for Virgin Australia to put its airline code on trans-Tasman services operated by Air New Zealand that are sold in Australia and start in Australia. These are called VA coded trans-Tasman services. The codeshare rights are given to Virgin Australia as long as Air New Zealand sets the prices at which Virgin Australia can market and re-serve these routes.Sale for free As long as there are seats available, codeshare agreements let the marketing carrier (Virgin Australia) sell as many seats as they want on the operating carrier's (Air New Zealand) services.

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“This proposed code sharing arrangement has the potential to increase ticketing choices for Australians travelling to New Zealand, and provide Velocity frequent flyer program benefits and international lounge access for eligible Virgin Australia customers,” ACCC Deputy Chair Mick Keogh said.

Virgin Australia and Air New Zealand will also be able to jointly provide businesses with discounts and other marketing offers for VA coded trans-Tasman services.

Currently Virgin Australia operates its own services on routes between Queenstown and Melbourne, Sydney and Brisbane. The proposed arrangements do not apply to these routes nor to any routes where Virgin Australia commences operating its own services in competition with Air New Zealand.

The ACCC notes concerns that the code sharing arrangements may result in increased demand for Air New Zealand trans-Tasman services and upward pressure on airfares.

“We consider it unlikely that any significant increase in passenger demand for trans-Tasman services due to this code sharing arrangement would raise airfares,’ Mr Keogh said.

“On current information, we also consider that the code sharing arrangements do not materially reduce Virgin Australia's incentive to operate its own services on other trans-Tasman routes.”

The ACCC has also granted interim authorisation to allow Virgin Australia and Air New Zealand to commence commercial planning for any marketing and selling of fares for VA coded trans-Tasman services.

“The interim authorisation excludes the direct or indirect marketing, provision of offers and sale of fares to all customers before the ACCC makes its final determination,” Mr Keogh said.

The ACCC is seeking submissions in response to the draft determination by 8 May 2024, before making its final decision.

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