February 03, 2014
Not content with growing through fleet expansion, Air New Zealand is the latest airline to follow the global trend of using “metal-neutral” joint ventures to take advantage of larger international networks.
The carrier's proposed strategic partnership with Singapore Airlines (SIA) will see the pair revenue-sharing on flights between their countries, and code-sharing on their networks beyond these points. The deal is similar to the one forged by Qantas with Emirates last year and the many strategic alliances established by Virgin Australia—including some with Air New Zealand and SIA.
The partnership is the most significant move yet by Air New Zealand's CEO Christopher Luxon, who took over at the beginning of 2013. It has its roots in a wide-ranging review of international operations that began while Luxon was head of the international unit and Rob Fyfe was CEO. This has already resulted in Air New Zealand switching from Japan Airlines to All Nippon Airways (ANA) as a Japanese partner, but Luxon has long stressed that other alliance moves were in the cards.
With Air New Zealand launching flights from Auckland to Singapore as part of the deal, the two airlines will significantly boost capacity on this shared route. But the most important feature of the agreement for Air New Zealand is that it extends its reach into Southeast Asia, as well as adding new destinations in Europe and other crucial international markets.
Luxon tells Aviation Week that Southeast Asia is currently the most obvious “white space” in the airline's network. He notes that SIA has strong connectivity in this region through mainline service and its SilkAir subsidiary, and their agreement allows Air New Zealand to benefit from that.
The carriers plan to introduce the joint venture services as early as December, and toward that end, Luxon says they are hopeful that New Zealand and Singapore regulators will approve the arrangement by midyear. A spokeswoman for New Zealand's Ministry of Transport says that while there is no statutory timeframe for it to make a ruling,“decisions on previous applications of a similar nature have generally been made within six months.”
Singapore Airlines already operates 12 flights a week to Auckland and daily service to Christchurch, New Zealand. Air New Zealand does not have flights to Singapore, but will take over five weekly flights from Auckland that SIA currently operates. It will add two more flights to give both airlines daily service on this route.