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Jetstar adds low-fare Auckland-Australia routes

Monday 13th October 2008

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Qantas Airways's low-fare Jetstar unit will add flights to Auckland, increasing the challenge to Air New Zealand by flying to its main hub.

Jetstar will operate daily return flights linking Auckland with Sydney and the Gold Coast, adding to its existing services out of Christchurch. The twice daily flights will add 258,000 seats to the routes each year, according to a joint statement from the companies.

The new services will start April 28, subject to regulatory approvals. Auckland International Airport shares rose 1.2% to NZ$1.72 and have dropped more than 40% this year. Air New Zealand was unchanged at 90 cents, having slid 53% this year.

Last month, Air New Zealand chief executive Rob Fyfe said he's ready to drop routes and reduce capacity if global demand for travel falls. "Closely matching capacity to demand will be a core focus for 2009," he said.

The airline has cut flights between Japan, Hong Kong and New Zealand while adding capacity to its Auckland to San Francisco route. Total long-haul capacity has reduced by 6% since the end of the 2008 financial year, Fyfe said.

Last month, Air New Zealand posted a 24% drop in annual profit because of higher prices for jet fuel and a drop in travel demand. Auckland Airport's earnings rose 3.3% excluding one-time items.

Chairman Anthony Frankham last month said the airport is "beginning to see signs of new international seat capacity coming into the Auckland market and we expect there will be more to come in the 2009 year."

The company spent NZ$142 million on terminals, runways, retail and property projects in the past 12 months.

Air New Zealand shares rose 1.9% to NZ$1.05 today and have declined 43% this year. Qantas gained 5.4% to A$2.72 on the ASX.

By Jonathan Underhill



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