Air New Zealand (Air NZ) and Singapore Airlines (SIA) have agreed to form an alliance enabling Air NZ to resume flights between Auckland and Singapore and permit SIA to deploy its Airbus A380 on flights to New Zealand for the first time. Subject to regulatory approvals, the carriers aim to boost their existing capacity between New Zealand and Singapore by up to 30 per cent.

Under the terms of the agreement, Air NZ will take over the operation of five of SIA’s existing flights on the Auckland – Singapore, adding two more weekly rotations and boosting the frequency to a daily schedule. This route will be served using a newly refitted Boeing 777-200ER and will mark Air NZ’s first flights on the route since its suspended its previous link in 2006. SIA will deploy the A380 on a daily rotation, progressively replacing an existing daily service with the smaller Boeing 777-300ER (initially on a seasonal basis).

Air NZ is on a positive growth trajectory with a clear focus on Pacific Rim destinations. An alliance with SIA clearly fits our business objectives of working with the right partners in the right markets to deliver seamless customer journeys,” said Christopher Luxon, chief executive officer, Air New Zealand.

The proposed alliance would enable Air NZ passengers to access codeshare travel on the SIA network to South East Asia, the United Kingdom and Europe and Africa as well as on the network of its regional subsidiary airline, SilkAir. SIA customers would be able to access codeshare travel across the Air NZ domestic network and to selected international destinations, significantly enhancing connectivity options. SIA’s daily Singapore-Christchurch service will also continue as part of the alliance.

“This alliance is another example of our commitment to the important Southwest Pacific market, and our commitment to the further enhancement of our network. This is a genuine win-win partnership, enabling SIA and Air NZ to work together to provide more flight frequency and enhanced travel options to our customers,” added Goh Choon Phong, chief executive officer, Singapore Airlines.

The two airlines are currently seeking approval for the alliance from the Competition Commission of Singapore and the New Zealand Minister of Transport and pending the regulatory OK could introduce the revised flight offering as early as December 2014. Alongside regional demand the arrangement will strengthen SIA's position against the growing competition from the big Gulf hub carriers on routes between Europe and New Zealand.

In the table below we look at scheduled passenger demand between Auckland and Singapore over the past ten years. According to the data, demand levels in 2012 where their second highest for a ten year period but were down 12.3 per cent on 2011 when Jetstar Asia began services, although levels are up 50.1 per cent across the ten year analysis.

The arrival of the low-cost service, now flown under the Jetstar Airways code, certainly stimulated demand as capacity rose 99.8 per cent that year, versus 2010. The data for 2013 shows a further decline in O&D demand with levels for the first eleven months down 6.5 per cent on last year. This information can help explain why the enhanced connectivity under the alliance agreement with Air NZ will be so important for SIA on the route.