Air Canada and Virgin Australia codeshare. Part 2: a ‘win-win’ for both Virgin and Air Canada

From early 2017 Air Canada and Virgin Australia introduce a tidy new partnership. Virgin Australia receives improved access to Canada - a market its existing JV partner Delta can't sufficiently cover from their shared Los Angeles gateway.

While Virgin gets access to Canada, Air Canada in turn receives access to Australia and New Zealand via Virgin's Australian east coast hub cities, which popular with Canadian tourists in their own right.

Tourism Australia reports that the most popular regions for Canadian visitors are Sydney (63%), Melbourne (33%), Tropical North Queensland (23%) and Brisbane (21%). Air Canada is missing access to Melbourne (until it starts its own service, as mooted), as well as regional connections (such as to Cairns) and multi-city access.

Initial co-operation is limited to Virgin placing its code on specific Air Canada services into Canada (Los Angeles to Calgary, Montreal, Toronto and Vancouver) from Los Angeles and Air Canada placing its code on specific Virgin services within Australia and to New Zealand. Still, both airlines have flagged the possibility of Virgin Australia codesharing on Air Canada's non- stop services to Vancouver and onwards to North America.

Looking only at one-stop markets, via Vancouver Air Canada can offer relatively minimally circuitous connections from a handful of US cities. Most notable is New York, from where flying to Sydney via Vancouver is only 2% longer than flying via Los Angeles. Three US cities - Anchorage, Portland and Seattle - have a shorter distance to Sydney via Vancouver than Los Angeles, although these are small markets.

Given Virgin Australia's well established partnership with Delta, this type of future cooperation with Air Canada may be tricky, but not impossible.

For travellers based in Australia and New Zealand, it would increase the range of options for Star Alliance frequent flyers and Velocity members based in this region and place further competitive pressure on heavyweight Qantas and its codeshare partner American Airlines.

Price comparison Sydney to Vancouver (direct and indirect flights): Departing 8-May-2017 Returning 15-May-2017

Source: Skyscanner

Price comparison Sydney to Toronto: Departing 8-May-2017 Returning 15-May-2017

Source: Skyscanner

Price comparison Sydney to Montreal: Departing 8-May-2017 Returning 15-May-2017

Source: Skyscanner

Price comparison Sydney to Calgary: Departing 8-May-2017 Returning 15-May-2017

Source: Skyscanner

When comparing current fares available into Canada, what emerges is the price advantage the Chinese carriers hold. This is particularly in circumstances where they are able to offer one stop connections via their hub cities, which no other carrier other than Air Canada is currently able to do. What also emerges is the price premium Air Canada is able to command for direct services, eg Sydney-Vancouver, the benefits of Virgin Australia will enjoy if the codeshare extends to Air Canada's services to Vancouver. Qantas, with the exception of its summer schedule to Vancouver which it flies direct using its own metal, is forced to rely on American Airlines for onward connections beyond Los Angeles and Dulles which usually results in 1-2 connections and a lengthy flying time.

Outlook: a mutually beneficial, and overdue, partnership

The Air Canada-Virgin Australia partnership is relatively inoffensive, with little to lose and a lot to gain.

While the Air Canada-Virgin Australia partnership illustrates the difficult relations within Star Alliance, and in particular the Air New Zealand, Air Canada and United triangle, it's still good news for Star Alliance frequent flyers and Velocity members whose options for flying between Australia / New Zealand - North America will increase.

In addition to the mutual benefit to both carriers, it also provides a competitive check to Qantas, whose increasing weight in the market is being felt, also keeping Delta on its toes. Finally, it will also likely mean the Chinese carriers will continue to offer deep discounting on fares to Canada via Asia. All this competition can only be good news for the consumer.

For Part 1 of this series, please click on the link below:

Part 1: the partnership is good news for consumers - but competition is mounting

https://corporatetravelcommunity.com/analysis/air-canada-and-virgin-australia-codeshare-part-1-the-partnership-is-good-news-for-consumers-but-competition-is-mounting/