Virgin Blue and Etihad to open shared Sydney lounge - and buy co-owned aircraft?

Virgin Blue and Etihad are set to extend their partnership beyond a flight and ticketing alliance with news that the two airlines plan to build a shared lounge in Sydney International Airport for business-class, first-class and high-status frequent flyer passengers.

But joint operations could possibly extend as far as joint ownership of new aircraft, according to Etihad CEO James Hogan.

As reported in The Australian, the two airlines are investigating several shared-cost measures to 'slash back-office costs and improve the efficiency of airport and maintenance services'.

Etihad's Hogan says that areas from "aircraft acquisitions" to engineering support and training "are (all) on the table."

"As long as the customer knows the value of the two brands, at the backroom we can extract costs and efficiencies," Hogan told The Australian.

Virgin CEO John Borghetti revealed that Virgin and Etihad would share a newly built lounge at Sydney International Airport. Etihad currently pays Air New Zealand to use its Sydney lounge, while Virgin shares Malaysian Airlines' Golden Lounge.

The strategic alliance between Virgin Blue and Etihad will also see Virgin's international carrier V Australia swap its low-yield Phuket and South African routes for flights to Los Angeles and a new 'feeder' services to Abu Dhabi, from which passengers can transfer to direct Etihad flights from the UAE hub to dozens of destinations, including many in Europe and the UK while also bypassing Heathrow.