Moody's Investor Services said on Monday that Virgin Blue Holdings Ltd's (ASX: VBA) recent decision to halt all its domestic service routes within New Zealand would redound to considerable benefits for its rivals, Qantas and Air New Zealand.

Moody's said that Virgin's exit from New Zealand's airspace would eventually erase the pressure on the cut-rate competition that marred the three airlines' business competition in the country.

As a direct result, the likelihood of boosted profits for both Qantas and Air New Zealand has become a proximate possibility if not a reality.

Virgin Blue revealed last week that it is set to stop its domestic operations in New Zealand by October 18 and would redeploy its fleet to service routes within and coming from Australia.

That move, according to Moody's, would lead to an upsurge of domestic load factors and yields for the two remaining airways, pushing further both companies' percentage of occupied seats per flight and revenues per passenger seat.

Moody's said that Virgin's decisions to swing its resources and focus on the Australian airline market would underpin its strategic approach of eating up on Qantas' shares on the business flyer segment of the market.

That could prove crucial for both companies as Moody's explained that Virgin's loss on New Zealand would be compensated on possible gains in Australia while Qantas could sacrifice some piece of its market back home in lieu of the benefits it is set to reap in New Zealand's domestic service routes.