Virgin Australia further delays re-entering most New Zealand destinations

Virgin Australia will fly some limited services to Queenstown. Photo / Supplied

Virgin Australia has again deferred returning to most New Zealand routes because of a weak demand outlook.

The airline had already pushed out a planned return to most transtasman routes from June to October but today has not put a date on a resumption to most destinations.

While it will push ahead with Sydney-Queenstown and Brisbane-Queenstown, as planned from September 18 and Melbourne-Queenstown services from December 7, other flights into Auckland, Wellington and Christchurch are off.

"Because current demand for other New Zealand destinations remains subdued, Virgin Australia will defer them from sale alongside services to Vanuatu, Samoa and the Solomon Islands for the time being," the airline said today.

Just before the pandemic hit, Air New Zealand had a 37 per cent share of capacity on the Tasman, Qantas had 26 per cent, Virgin Australia 18 per cent, Jetstar 10 per cent and the remaining 9 per cent was shared between other carriers.

The Virgin decision will be good news for Air New Zealand and Qantas which will have the market to themselves for longer. Those airlines have also scaled back on their transtasman flights, started up when the quarantine free bubble was announced, because of subdued demand.

Virgin Australia said forecasts released in this week's Federal budget outline new predictions for the aviation sector, including for international travel, where visitation is expected to remain low until at least mid-2022 had affected decisions in other markets.

The airline will defer most short-haul international flying, including to Fiji and Indonesia, until at least December 2021.

While the international travel outlook remains uncertain, the airline said Australian domestic travel continues to go from strength to strength and it is continuing to review its domestic network to ensure it's responding to growth opportunities.

Customers impacted by the changes will be contacted directly and provided with options to obtain a full refund to the original form of payment or a credit for future travel with Virgin Australia.

Virgin Australia chief strategy and transformation officer Alistair Hartley said the new forecast for international travel has required Virgin Australia to reassess its network as well as give customers plenty of notice of any changes to their travel plans.

"While we know some Australians are itching to travel overseas, it is clear that international travel won't return to normal as quickly as first anticipated.

"Although we've seen positive developments with the transtasman travel bubble and Governments working exceptionally well to manage outbreaks, current demand for travel to New Zealand remains subdued, except for Queenstown, where customers are looking to travel over the September school holidays and the upcoming summer."

All other New Zealand services will be deferred for the time being and no seats are being sold.

"We are continually reviewing our network to respond to the latest advice, and importantly looking at whether we can restart short-haul international flying, including to New Zealand earlier, should travel demand improve and circumstances change."