Air New Zealand rules out launching in Aussie as Virgin Australia struggles to survive

Virgin Australia's New Zealand based staff shared photos from their last day on the job.
Virgin Australia's New Zealand based staff shared photos from their last day on the job. Photo credit: Newshub.

Air New Zealand has "no plans" to enter the Australian domestic market, despite cash-strapped Virgin Australia desperately pushing for financial aid and ways to restructure in order to continue operating.

Trading was halted on Tuesday for the Australian airline, but an extension was put in place on Thursday morning and will last for up to seven days. Virgin has been hit hard by the COVID-19 pandemic and its future remains unclear.

The Australian government has so far denied Virgin's request for assistance, rejecting a proposal that would see the government paying it $1.4 billion, which it could convert to equity.

Aviation commentator Geoffrey Thomas says the failure of Virgin Australia could cost travellers around $50 billion over the next 10 years as a lack of competition would allow Qantas to increase its airfares.

He said airfares typically rise by 20 percent when there's just one carrier operating on an Australian flight route.

"Australia faces the real prospect of an airline monopoly that will cost the economy tens of billions and devastate the tourism industry with airfares soaring unless the government steps in to support Virgin Australia - and Qantas," Thomas said on AirlineRatings.com.

Australian Treasurer Josh Frydenberg said the government had no place in the industry.

"We want to see two airlines in the domestic market but we're not in the business of owning an airline," Frydenberg said.

The airline considers entering voluntary administration as a last resort but needs a decision on government aid by next week, sources told Reuters.

Starting a rival to Qantas from scratch wouldn't be easy and Air NZ - which is licensed to operate in Australia - sold its shares in Virgin in 2016.

"We have no plans to operate domestic services in Australia," an Air NZ spokesperson told media on Thursday.

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