Air New Zealand has quit its alliance with Virgin Australia over trans-Tasman flights, paving the way for cheaper flights.
From October, the Kiwi carrier will end a deal that sees the companies code-share, split revenue and offer frequent flyer programs and reciprocal lounge access.
A Virgin spokesperson said it was Air New Zealand’s decision to pull out of the alliance that had been in place since 2010.
Consumer benefits are likely to flow from increased competition over the airspace between the two countries as Virgin, Qantas and Air New Zealand all vie for customers.
Australia is the biggest source of in-bound visitors to New Zealand.
Ending code-sharing will reduce the service frequency the airlines can offer, but Air New Zealand spokesman Cam Wallace said the carrier would be ramping up its services to and from Australia.
“We’re looking to grow our footprint,” he told Fairfax Media.
“We think in the medium term our customers will have as good options as they’ve had before.”
Mr Wallace said the market had changed significantly in the years since the alliance was struck and it was the right time for the pair to go their separate ways.
“We do think it’s easier or better to serve our customer with our own product, our own planes, with our own people,” he said.
Virgin group chief executive John Borghetti said his airline would continue servicing New Zealand and would consider employing its budget arm, Tigerair, on the route – something it could not do under the alliance.
Virgin may also look to fly domestically within New Zealand.
Services will be unaffected up to October 27. Customers on flights after that date will be contacted by the airline they booked with.