Actually this could work nicely, Air NZ gets to pullout of as many regional domestic markets as it likes now and can codeshare on any Jetstar regional routes that may pop up as a result. I would say Virgin may be a little concerned as they do a lot of code sharing with Air NZ in Australia and may have just lost this market share to Qantas.
NZ had already planned to end its codesharing with VA from 26 October 2018 - originally were just going to book passengers on VA coded services, this since has changed to QF.
Bassicly NZ is now going after VA.