Jetstar to launch regional flights from December

Thursday 18th June 2015

Jetstar, Qantas Airways’ budget offshoot, has announced an expansion of domestic regional routes in New Zealand to end Air New Zealand’s stranglehold on the regional market.

At a press conference attended by Prime Minister John Key and Qantas head Alan Joyce, Jetstar NZ said it will launch the new routes in December, and expects to have four destinations up and running in the new year. While it hasn't decided which routes it will service, the airline is looking at Hamilton, Rotorua, Napier, New Plymouth, Palmerston North, Nelson and Invercargill.

When Jetstar launched in New Zealand there was pent up demand, and Joyce said he expects the airline's expansion into regional routes will have a similar experience.

The planned expansion will add about 100 new jobs to Jetstar's New Zealand workforce of about 400.

Jetstar has been flying across the Tasman since 2005, and then moved into domestic routes in 2009.

Currently it uses nine Airbus A320 jets to fly to Auckland, Wellington, Christchurch, Dunedin, and Queenstown.

The low-cost airline has been considering for some time the viability of flying into the regions using turboprop planes operated by Qantas on its Australian regional routes. It will use the 50 foot planes on the New Zealand routes. Qantas is one of the largest operators of the Bombardier Q400 turboprop aircraft which it claimed to be the fastest of any regional Australian airline.

Jetstar has a market share in New Zealand on domestic flights of around 17 percent by passenger numbers.

Prime Minister Key, who also holds the tourism portfolio, welcomed the announcement, saying better connectivity typically attracts increased tourism, and that cheaper air fares should help invigorate the regional economies.

Air New Zealand suffered a consumer backlash after pulling out of operating services to three of its smaller destinations, Kaitaia, Whakatane, and Westport, from April. The airline’s regional carrier Eagle Air is also scaling back on serving other towns this year and will eventually cease as an airline when the company retires its fleet of 19 seater Beech 1900D aircraft by next August. Air New Zealand claimed to have been losing $1 million a month on the unprofitable routes in the past two years.

Air New Zealand shares dropped to their lowest level since November in the lead-up to the announcement, and were recently down 7.6 percent to $2.45.

New Zealand's national carrier announced this week it had been handed over another of its ATR 72-600 for its regional network, the seventh it has received since 2011 to replace the Beech aircraft.

Jetstar returned to profitability in its latest six monthly result, reporting a underling earnings before interest and tax of A$81 million for six months ended Dec. 31 2014, from a A$16 million loss in the previous corresponding period. That followed increased yields from a cutback in capacity in the Australian and south-east Asia markets.

BusinessDesk.co.nz

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