Emirates winds down air miles deal with Virgin Blue

Arrangement ends as Australian carrier steps up Etihad ties.

Emirates Airline is downsizing its relationship with Australia's Virgin Blue as Etihad Airways is preparing to create a wide-ranging alliance to boost passenger traffic between the two countries. The Dubai airline is winding down a reciprocal arrangement that allows customers of each airline to earn and redeem miles on each other's loyalty programmes, called Skywards at Emirates and Velocity at Virgin Blue.

The changes come as Virgin Blue changes its timings on its "trans-Tasman" service to New Zealand operated by its international arm, V Australia, an Emirates spokeswoman said. But Emirates said it would continue a separate "interline" agreement with Virgin Blue that was signed in July last year. It is one of a number of major changes Virgin Blue is taking to realign the business, including a strategic alliance with Etihad announced last week that will see the two airlines collaborate and feed traffic to each other's networks, including an integration of each other's loyalty programmes.

Etihad believes it will boost its traffic to and from Australia, a key market for Gulf airlines, by nearly 25 per cent next year as a result of its link-up with Virgin Blue. The Emirates spokeswoman said the reciprocal arrangement between the Velocity and Skywards programmes will end within six months, and that all Skywards members would be directly notified of the changes and the cut-off date for redeeming points.

The airline declined to discuss the effect of Etihad's alliance with Virgin Blue on its decision. "The partnership ended on its own commercial terms," Emirates said in a statement. "It is not appropriate for us to comment on other airlines' commercial activities or decisions." Emirates is the world's largest international airline by capacity and yesterday opened its 105th destination, to the west African country of Senegal.

"No more will passengers travelling to and from Senegal face long detours to Europe or other parts of Africa to reach their final destination," said Nigel Page, the senior vice president of commercial operations for Africa and the Americas at Emirates. Yesterday, Emirates also said it would need more than US$28 billion (Dh102.83bn) over the next eight years to finance new aircraft arrivals, a Bloomberg report said.

Since its launch in 1985, the airline raised $21.6bn through operating leases, export credit agency support, commercial asset-backed debt and other sources such as Islamic funding. igale@thenational.ae