Heavy going for Air New Zealand
A report in the Sydney Morning Herald says that bar Ansett, no other mainstream airline in the Pacific has experienced as turbulent a time recently as Air New Zealand has, with competition across the Tasman and on its international routes remaining as tough as ever, and the days of a cosy alliance with Qantas appear long gone.
Now it faces a new challenger on its domestic network which, despite the presence of Qantas on the main trunk routes, has been its financial mainstay through the tough periods.
Virgin Blue’s soon-to-be-launched services flying between Auckland, Wellington and Christchurch will no doubt put further pressure on Air NZ’s bottom line if the low forward ticket prices now offered by both are anything to go by.
Given the popularity of the routes in question, UBS reckons Virgin’s entry is likely to cost the national carrier $15 million in reduced net profits this coming year (the forecast result is now $225 million). In 2009 the outcome could be greater, with an expected $277 million falling to $244 million.
Still, the one saving grace for Air NZ is that Qantas is looking to convert its full-service proposition to the no-frills Jetstar service to meet its Australian-based rival head-on.
Back-of-the-bus travellers will no doubt welcome paying one-way fares as low as $39 – and more likely between $59 and $69 on a regular basis – but Air NZ may well benefit from a switch of commuters and higher-earners who see little point in flying on the cheap.
That, and its frequent flyer program, could help alleviate some of the financial flak that UBS expects Air NZ to cop.
Report by The Mole
John Alwyn-Jones
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