Air New Zealand Steps Into Jetstar Breach

Following the announcement by Jetstar that they would exit five regional routes in New Zealand at the end of this month, Air New Zealand has stepped into the breach by announcing hundreds of additional flights on the affected routes.

Jetstar is winding up services between Auckland-Palmerston North, Auckland-Nelson, Auckland-Napier, Auckland-New Plymouth and Wellington-Nelson on 30 November 2019. All these routes were served by Bombardier Q300 aircraft.

When Jetstar announced this there was some consternation in the affected towns that Air New Zealand would wind back services themselves and/or increase fares. Before Jetstar ending these flights, the airline had a 17% share of New Zealand’s domestic aviation market. Air New Zealand had an 81% market share.

Thus far, there has been no outcry about rising fares but Air New Zealand is moving to fill the vacuum on the routes Jetstar is exiting.

Air New Zealand is adding 586 one way frequencies across five routes between January and March 2020. It follows an earlier move by the dominant Kiwi airline to add 253 one way flights (or 15,500 seats) across the five routes in December 2019. At the time, Air New Zealand’s Cam Wallace said:

“Air services are extremely important for regional New Zealand, particularly over the busy holiday period, so we’re pleased to be able to step in and add capacity to the routes impacted.”

With the most recent announcement of extra services by Air New Zealand, they have now added approximately 50,000 Air New Zealand seats on the five routes across the four months these extra services cover.

Air New Zealand’s acting chief executive officer Jeff McDowall told New Zealand’s One News that the airline has been “working hard to look at how best to utilise its turboprop aircraft and crew to support routes impacted by Jetstar’s withdrawal.”

“We’re pleased to be able to get behind regional New Zealand by adding these extra services, particularly during the summer months.

Quite. It’s hard to diss Air New Zealand for stepping into the breach left by Jetstar. I don’t think it’s entirely altruistic though. Air New Zealand is working through a cost-cutting program and is unlikely to be dropping 50,000 seats onto routes as a community service.

Air New Zealand is already New Zealand’s dominant airline by a country mile. Those Kiwis are fiercely attached to their national airline. This move will just reinforce their domestic market dominance. Again, can’t blame Air New Zealand for that.

It all comes down to what Air New Zealand does with fares on these routes. If they raise them there will be a hullabaloo and the airline will be accused of abusing its monopoly position. So far, Air New Zealand is smart enough to take a softly softly approach. However, a slightly different trend may emerge over the longer term.


Categories: Air New Zealand

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