01/08/09, 00:10:43 UTC

  e-mail this article

No plans to expand Qantas's Kiwi service

stuff.co.nz

Qantas has no definite plans to increase services ahead of rival Pacific Blue starting flights on New Zealand routes in just over a month, with analysts predicting only one would survive.

A business audience heard little to justify what was expected to be Qantas' "big plans to boost its New Zealand profile" at a Wellington Regional Chamber of Commerce function last week.

Instead, corporate sales manager Russell Williss, standing in at short notice for Qantas New Zealand general manager Grant Lilly, said the two-year delay in taking delivery of its new Airbus A380 super-jumbos had resulted in a shortage of aircraft available to expand the New Zealand domestic services.

Qantas was now due to receive its first A380 in August next year. It flies four 737s on most domestic main trunk routes, Queenstown and Rotorua. Air New Zealand has 14 and was adding another two.

Australian rival Pacific Blue would add main trunk services to its cross-Tasman operation in November, initially with two larger 737-800s, and a third to be allocated.

"There is a certain amount of frustration out there, with a perception that there has been a lack of desire or intent from Qantas' perspective to build a continued presence in the New Zealand market," Mr Williss said.

'That probably holds a little water. In reality nothing could be further from the truth."

The A380 delay meant aircraft that could otherwise have been available for New Zealand had instead been needed to cover more important routes, Mr Williss said.

The arrival of some new widebody jets had eased the pressure a little but it would be some time before the smaller 737s currently flying domestic routes in Australia became available for New Zealand.

Qantas planned to refurbish its existing fleet in the meantime.

Even when aircraft did become available, it was likely to be more of the old 737-300 and 400s, rather than the next generation 800 used by Pacific Blue, Mr Williss said.

Qantas' aging New Zealand domestic fleet has been dogged with mechanical unreliability.

"We have had more than our own share of problems and dilemmas with that of more recent times," Mr Williss said.

New Zealand was a one-and-a-half airline market, and that situation existed at the moment with Air New Zealand dominating and Qantas providing the half airline service, he said.

The entry of Pacific Blue would pose some challenges for both Qantas and Air New Zealand, but Qantas would fight, with the short-term gain going to passengers through lower fares.

Analysts expected the main fight for survival would be between Qantas and Pacific Blue. Mr Williss questioned the sustainability of Pacific Blue's planned three-times-daily service between Wellington and Christchurch against Air New Zealand.

Qantas pulled off the route in March to free capacity and allow it to recover more quickly from breakdowns.

Qantas has had a 40-year commitment to the New Zealand market, and took over from its failed domestic franchise holder in New Zealand six years ago.

It carried about 1.2 million domestic passengers a year, compared with Air New Zealand's 7.7 million, including regional services.

The airline was also faced with the threat of increased competition in its home market with the arrival of Singapore Airlines-backed budget airline Tiger, and the potential arrival of Asia X, Mr Williss said.

"We are not in the habit of giving away too much on our home turf, even if it is at the cost of having a bit too much capacity in the market."

Qantas bosses had to be convinced that the tough New Zealand market would provide sufficient return on the cost of an aircraft, he said.

The New Zealand business was now performing "better than breakeven", compared to losing $40 million to $50 million a year before the trans- Tasman business was restructured as Jetconnect.

The level of awareness of the New Zealand situation at senior executive level in Sydney was at its highest ever, Mr Willis said.

"I think we will be in a position to have something concrete in the not too distant future."

 Printable Version  | published Sep 24, 2007