Air New Zealand (NZ, Auckland Int'l) and Virgin Australia Holdings have confirmed they will terminate their trans-Tasman alliance in October this year following seven years of partnership.

The Australian holding said in a disclosure to the ASX that it had received notice that Air New Zealand intends to end their strategic alliance once ACCC authorization for the tie-up expires in October this year. The parties will therefore not apply for renewal.

Commenting on the move, Air New Zealand Chief Revenue Officer Cam Wallace said market dynamics in the Tasman market had changed and the time was now right for each airline to focus on its own objectives. Air New Zealand once held equity in its Australian counterpart only to divest it in October 2016 to investors including China's Nanshan Group.

“Australia is the largest source of inbound visitors to New Zealand and Air New Zealand has built up a significant presence in this market," Wallace said. "This move will enable us to deliver a more consistent customer experience by using our own fleet and delivering an improved schedule, which we’ll provide more details about shortly."

For his part, Virgin Australia Group Chief Executive Officer and Managing Director John Borghetti said the post-Air New Zealand era would present both Virgin Australia and Tigerair Australia with opportunities in the trans-Tasman market.

“The Virgin Australia Group has had a strong presence in the market since 2004 and we will continue to enhance our offering to suit both the business and leisure markets. Virgin Australia will continue its strong focus on providing competition and outstanding service on the Tasman, which remains an important part of our network and strategy as an airline group,” he said.

The two currently codeshare on each other's flights between various cities in Australia and New Zealand. However, these current trans-Tasman alliance arrangements will remain in place until October 27 following which affected customers will have to make alternate arrangements.