Virgin Blue aims to boost alliance strategy as NZ decision nears

Virgin Blue’s quest to double its share of business travellers by building a global network of airline alliances continues to gather momentum.

A decision on the carrier's proposed trans-Tasman alliance with Air New Zealand is due from Australian and New Zealand regulators later this week.

If the deal is approved it will reshape the way travellers move between the two closely-linked countries and provide Virgin Blue with another high-traffic and high-value route out of Australia, and thence through Air New Zealand's network on to the rest of the world.

That’s a big 'if', given that the Australian Competition and Consumer Commission rejected the alliance in a draft ruling earlier this year. New Zealand’s Ministry of Transport is seen as being more favourable than the ACCC, but industry analysts say the final decision is too close to call.

Virgin Blue and Air New Zealand claim their alliance would mean additional trans-Tasman capacity plus the opening of new routes between the two countries.

In their submission to the ACCC the airlines pledged to increase the frequency on six existing routes and add further services in response to increased demand, resulting in a total of 326 additional flights each year – close to one per day.

In addition to the Air New Zealand tie-up, Virgin Blue is also working on an agreement with Delta on routes between Australia and the US.

Virgin Blue chief executive John Borghetti recently travelled to Washington to rescue his airline’s planned alliance with Delta after the US Department of Transportation voiced their opposition to the deal, but recent reports suggest this may yet change. A decision on that alliance is due in February 2011.

With its partnership with Etihad now in place and set to open up travel to the Middle East, Europe and the UK – with the added appeal of direct flights from Etihad's Abu Dhabi hub into destinations like Athens and Dublin – Virgin Blue is on track emerge as Australia's second international carrier.

That position, and its ability to challenge Qantas, will only be strengthened as VIrgin Blue also looks into adding a premium Asian airline to its dance card.