Thursday 20th March 2014
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Jetstar, the discount unit of Australian airline Qantas Airways, is abandoning the Auckland- Singapore as Air New Zealand awaits regulator's approval on its code sharing deal with Singapore Airlines that will lift their combined capacity by 30 percent.
Jetstar launched a daily service between Auckland and Singapore in 2011, but trimmed back to three flights a week in 2012 because of falling demand. The low cost carrier said it had decided to put the capacity "to better use on other routes".
The decision comes as Air New Zealand waits for regulator's approval on a code sharing deal with Singapore Airlines. Under the arrangement, Air New Zealand will fly daily on the route using Boeing 777-200ER aircraft, returning to Singapore for the first time since 2006, and Singapore Airlines will operate Airbus A380s.
Jetstar wouldn't say whether the Air NZ-Singapore tie-up had been a factor in its decision to drop the route. "Route reviews take into consideration a number of factors including past performance and future potential," the airline said in an email.
"Jetstar is always keen to bring competition to monopoly routes and for the past three years has provided a low fares choice on the Singapore-Auckland route," a spokesperson for the airline said.
Auckland International Airport, New Zealand's busiest gateway, said the loss of Jetstar's Singapore service would cost the New Zealand tourism industry over $70 million every year and remove 100,000 low fare seats from the market.
"Today's announcement confirms the concerns we expressed to New Zealand's minister of transport that the proposed alliance between Singapore Airlines and Air New Zealand could have detrimental impacts on the growth and promotion of competition in international air services," said Glenn Wedlock, the airport's aeronautical commercial general manager.
Jetstar's parent company, Qantas, posted an A$252 million annual loss last month and has announced plans to sack 5,000 workers as the Australian government contemplates relaxing foreign investment rules around the airline.
Air New Zealand's shares rose 0.8 percent to $1.88 and have gained 25 percent in the past 12 months. Auckland International Airport fell 1.3 percent to $3.85 and have advanced 39 percent over the past year. Qantas shares fell 0.5 percent to $1.085 on the ASX.
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