The problem there is that Australians will never be competitive with NZ wages. It is unrealistic to expect Pac Blue wages to go up to Australian levels. And there lies the issue. If
VB crew are not willing to take pay cuts to compete with the Pac Blue operating cost they will just start setting up Pac Blue bases around Australia on NZ conditions. It already happens in many other industries, aviation is really dragging the chain in comparison.
I guess the other option is to dissolve Virgin Blue and make it VAustralia and rewrite the contracts but not to sure how legal all that is.