Final nod for Air NZ alliance

JOHN ANTHONY AND ALAN WOOD
Last updated 05:00 09/08/2014

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Air New Zealand has been given the green light by the Government to form an alliance with former rival Singapore Airlines.

Under the alliance, announced in January, Air New Zealand will resume flying between Auckland and Singapore, having abandoned the route in 2006 because of heavy losses.

Approval was granted by Transport Minister Gerry Brownlee this week for four years.

Brownlee said that in this time the airlines would need to demonstrate that the alliance had delivered benefits to consumers and had not had an adverse impact on competition in other markets.

The alliance should help strengthen New Zealand's ties with emerging Asian markets, he said.

The Competition Commission of Singapore gave its approval in April.

The alliance will lead to more flights between Singapore and New Zealand and provide improved connections through reciprocal codeshare agreements.

Air New Zealand will take over five services operated by Singapore Airlines using upgraded Boeing 777-200ERs and add two flights a week.

Singapore Airlines will progressively replace its remaining daily 777-300ER services with A380 super-jumbos.

Together, the two carriers will increase seat capacity on the route by up to 30 per cent.

Air New Zealand chief executive officer Christopher Luxon said the alliance would benefit customers and New Zealand's tourism industry.

Tourism Industry Association chief executive Chris Roberts said the approval of the alliance was also aligned with the tourism industry's goal of $41 billion in total tourism revenue by 2025.

"Growing sustainable air connections is crucial to growing the value of tourism. The alliance between Air New Zealand and Singapore Airlines has immediate benefits in terms of additional capacity and also offers a sustainable partnership that should provide long-term gains and opportunities," Roberts said.

The airlines will share all revenue on the route, which has no other competitor after Qantas-owned budget airline Jetstar pulled out last month.

The alliance will provide Air New Zealand passengers with access to Singapore Airlines' extensive Southeast Asian network and beyond to Britain, Europe and Africa, as well as the network of its regional subsidiary, SilkAir.

Singapore Airlines will in turn gain access to Air New Zealand's domestic network and some international destinations. The alliance is expected to take effect by the end of the year.

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