January 16, 2014
A proposed strategic alliance linking Air New Zealand and Singapore Airlines will significantly broaden service between the two countries, and will also let Air New Zealand extend its reach into Southeast Asia and other important international markets.
The two airlines intend to form a revenue-sharing joint venture on flights between New Zealand and Singapore. They will also code-share and coordinate sales in a range of markets beyond Singapore, and on New Zealand domestic routes.
Air New Zealand CEO Christopher Luxon tells Aviation Week that the agreement helps fill the most obvious “white space” in the airline’s network—Southeast Asia. He notes that SIA has strong connectivity in this region through mainline service and its SilkAir subsidiary.
The carriers plan to launch the joint venture services as early as December, and Luxon says they hope New Zealand and Singapore regulators will approve the arrangement by mid-year.
Singapore Airlines already operates 12 flights a week to Auckland and daily service to Christchurch. Air New Zealand does not have flights to Singapore, but as part of the proposed deal it will take over five weekly flights from Auckland that SIA currently operates. It will also add two more flights to give both airlines daily service on this route.
SIA will replace Boeing 777s with Airbus A380 service on the Auckland route, on a seasonal basis initially. Combined, the changes will increase capacity on this route by 30%.
From SIA’s perspective, the alliance will allow it to further strengthen its presence in the Australasian market, which is among its most important. Together, the two airlines will have more frequency between Singapore and New Zealand than either carrier could operate individually, an SIA spokesman notes. “Each of us is able to expand our network and there will be [extra] feed into both carriers’ flights,” he says.
While SIA does not reveal market-specific statistics, the revenue-sharing arrangement is not in response to any performance issues on the Auckland route, says the spokesman.
For Air New Zealand, adding Southeast Asian destinations to its network via code-share will let it partner with New Zealand travel and tourism agencies as they launch campaigns in countries like the Philippines and Indonesia, Luxon says.