Rivals Qantas and Virgin Blue

On the same day that Virgin Blue revealed an alliance with Etihad Airways, Qantas announced it would cancel its codeshare with the Abu-Dhabi-based airline.

"The Qantas-Etihad codeshare was terminated...effective 29 November," a Qantas spokesperson told e-Travel Blackboard.

"We are starting the process for contacting customers who have travel booked beyond that date...to discuss their options."

An aviation analyst commented the new Virgin Blue-Etihad agreement "dwarfs" Etihad's arrangements with Qantas who now have no service to the Middle East apart from a OneWorld arrangement with Royal Jordanian.

In related news, in a submission to the Australian Competition Consumer Commission (ACCC), Virgin Blue and Etihad Airways have applied for "interim authorisation" to start marketing their services between Australia and Abu Dhabi.

Claiming that "long lead times are required...to make the new long haul services successful" the carriers have applied for authorisation to initiate marketing six to nine months early to attract traffic feed and "build customer demand" for the services.

Given that Virgin Blue and Etihad Airways believe the alliance will have "no adverse effect on competition" and will in fact promote competition to the Middle East, they have called on the ACCC to grant interim authorisation from 10 September 2010, "pending a final authorisation decision".

According to Virgin Blue, failure to grant the interim authorisation would see the "parties suffer detriment".

"Virgin Blue's experience with limited demand following the launch of services in South Africa has shown that lead time is required in order to establish brand presence in new markets overseas and an association between a brand and a destination," Virgin Blue's statement to the ACCC read.