SINGAPORE Singapore Airlines Ltd (SIAL.SI) and Air New Zealand (AIR.NZ) have deepened ties in a partnership on shared codes and flights that could divert some traffic from Australia, potentially adding to pressure on loss-making Qantas Airways Ltd (QAN.AX).
The tie-up is in line with Singapore Airlines strategy to form global partnerships for its flagship premium airline amid growing competition for the region's travelers from ambitious Gulf carriers including Emirates Airline EMIRA.UL and Etihad Airways.
Singapore Airlines has already expanded its footprint in Australia, increasing its stake in Virgin Australia Holdings Ltd (VAH.AX) alongside Air New Zealand and Etihad to boost passengers feeding into its long-haul premium services. That deal came after Qantas switched its transit hub from Singapore to Dubai as part of a wide-ranging alliance with Emirates.
Last month, Australia spurned a plea for help from Qantas, whose credit rating was relegated to junk status by Standard & Poor's following a shock loss warning from the carrier, squeezed on its international routes.
Singapore Airlines and Air New Zealand have enjoyed close ties for years. Under the agreement unveiled on Thursday, Air New Zealand will get to fly the Auckland-Singapore route, while Singapore Airlines will operate the Airbus A380 to New Zealand.
"Subject to regulatory approvals, the carriers would aim to boost their existing capacity between Singapore and New Zealand by up to 30 percent year-round over time," the partners said in a joint statement.
Pending the approvals, flights could commence as early as December 2014.
The new alliance would enable Air New Zealand passengers to access codeshare travel on the Singapore Airlines network to Britain, continental Europe, South East Asia and Africa, as well as on the network of its regional subsidiary airline, SilkAir.
Singapore Airlines' customers would be able to access codeshare travel across the Air New Zealand domestic network and to selected international destinations. Air New Zealand last operated to Singapore in 2006.
Air New Zealand has been filling more seats through competitive pricing. Increasing routes to Asian countries, a growing source of tourism dollars, has also helped its long-haul flights turn a profit.
In one of the long-standing links between the pair, Singapore Airlines previously owned shares in Air New Zealand. But it sold its entire 6.3 percent stake in Air New Zealand in 2004, ending a four-year investment that cost the company about $336 million at that time.
(Reporting by Anshuman Daga; Editing by Kenneth Maxwell)