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Post by corsair67 on Aug 22, 2007 11:04:26 GMT 12
Well, this will be interesting?   Virgin takes on Kiwi market Steve Creedy, Aviation writer | August 22, 2007. VIRGIN Blue has delayed a decision on launching an Australian ultra-low-cost carrier in favour of entering the looming battle for the New Zealand domestic market. The airline confirmed the move yesterday as it announced that annual profit had doubled to $216 million as it carried more passengers per flight at a higher average ticket price. The profit before one-off expenses was $232 million. Virgin's decision to launch wholly owned unit Pacific Blue on New Zealand domestic routes comes as Jetstar has signalled a move on that market and Air New Zealand is due to unveil a new domestic offering next week. The Kiwi carrier said yesterday it was not surprised by the announcement and that a domestic review launched several months ago would yield "the next (stage of) evolution in travel experience within New Zealand". "We remain confident that the initiatives we will unveil at our annual result on Tuesday will herald a new era for low-cost, efficient and comfortable domestic air travel," Air NZ general manager for short-haul airline, Norm Thompson, said. Virgin chief executive Brett Godfrey was tight-lipped about the new venture, but said the airline believed it had the opportunity to be a "first mover" in the low-cost segment of the New Zealand domestic market. He said capacity earmarked for the ultra-low-cost carrier (ULCC) had been allocated to New Zealand, but this did not mean Virgin had abandoned the concept and a decision on it could be taken as early as next February. The ULCC had been put to the board, which had agreed with the strategy, but management had yet to seek formal approval. "We have a bunch of Embraers coming on next year, andthen we can decide, probably in the first quarter, whether the aeroplanes that they free up go on to high-yielding existing markets or do we turn them into a distinct business unit and go after the very bottom end of the market," he said. Virgin's results exceeded most analysts expectations and the airline has predicted more of the same in 2007-08, despite the added costs of starting new operations and the arrival of Singapore-backed Tiger Airways. Australia's second-biggest carrier is planning significant growth over the next 18 months that includes a new fleet of 20 Embraer regional jets and the launch of its new V Australia international carrier using Boeing 777s. It believes the Embraers will give it access to about 18 per cent of the market that it doesn't serve with its Boeing 737s. The airline declared a 2c per share fully franked dividend, as revenues rose 16.3 per cent to $2.17 billion and passenger numbers rose 7.7 per cent to 15.3 billion. Traffic, measured as revenue passenger kilometres, increased 7.3 per cent on a 2.9 per cent rise in capacity to push up load factors 3.3 percentage points to a healthy 81.2 per cent. Operating costs rose 9.3 per cent to $1.84 billion, partly driven by a 7.9 increase in fuel, with underlying unit costs up 2.6 per cent once fuel and one-off expenses were excluded. The airline is 49 per cent hedged for the current financial year, a position with which Mr Godfrey said he was comfortable. But it was a 13.2 per cent rise in revenue per available seat kilometre -- a measure which reflects movements in both ticket prices and passenger loads -- and Virgin's 14.2 per cent pre-tax profit margin that pleased the Virgin boss the most. Deutsche Bank analyst Jason Bloom described the results as excellent but noted they had been partly expected given the strong operating environment. |
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Post by beagle on Aug 22, 2007 11:48:51 GMT 12
wonder if it will be 737's or EMB 170/190's
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Post by corsair67 on Aug 22, 2007 12:19:27 GMT 12
Good point, Beags, as they will be operating both types over here by the end of this year.
The other interesting thing about this is announcement is does this spell the end of the other planned NZ domestic operator, Kiwijet?
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Post by Dave Homewood on Aug 22, 2007 18:03:39 GMT 12
About time, Branson mooted this years ago but was stalled by various reasons.
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Post by beagle on Aug 22, 2007 18:48:09 GMT 12
The other interesting thing about this is announcement is does this spell the end of the other planned NZ domestic operator, Kiwijet?
yes i was thinking this too, then again, there was a time in a country not far from here where there were 2 major airlines plying the skies and another came onto the scene and after a while it ended up one of the original big player went tits up, so if virgin arrives with gusto and kiwijet does start up with a ferocious price war etc, it could be our govt owned airline that might get into some trouble.
Don't laugh. Then again I could be totally wrong, not that I wish it to happen but aviation is a fickle game at times.
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Post by corsair67 on Aug 23, 2007 12:56:24 GMT 12
As expected, they only flying the main trunk routes between the three main centres!
From The Australian.
Virgin announces cheap flights on NZ routes
August 23, 2007.
NEW Zealanders will enjoy cut-price domestic airfares after Pacific Blue today announced details of their foray into the local market.
The airline today said it would fly on the Auckland-Wellington, Auckland-Christchurch and Wellington-Christchurch routes from November 15.
Introductory fares of $NZ39 ($34) on flights between the routes have been announced.
In a statement, Virgin Blue chief Brett Godfrey said the time was right for the airline to enter the New Zealand market.
"We are confident the circumstances are now right and there is room for competition and an obvious need for market stimulation," he said.
"Pacific Blue is well positioned to give the existing players a good run for their money, particularly on the monopolistic Wellington-Christchurch route."
The cheap flights will be available on the routes between November 15 and February 29 next year although they must be booked online before September 16, or until sold out.
The airline's introduction of cheaper fares from Christchurch to Auckland could be a boon for Australians wanting to travel to New Zealand's biggest city.
Cut-price airline Jetstar's flights into New Zealand currently go only to Christchurch, so cheaper connecting flights may make it more affordable to reach Auckland.
Virgin's flamboyant billionaire chairman Sir Richard Branson said Pacific Blue would shake up New Zealand's domestic market.
"We look forward to Pacific Blue spreading its wings and bringing long term domestic bliss, perhaps not for the competition, but certainly for locals and visitors travelling within New Zealand," he said.
After its announcement on Tuesday that it would launch an assault on the New Zealand market, Pacific Blue wiped $NZ147 million off the value of Air New Zealand.
Air New Zealand and Qantas' cheapest flights between Auckland and Wellington for November 15 are reportedly $NZ89 ($78), while a ticket between Christchurch and Auckland costs $99 ($86).
A spokeswoman for Flight Centre in New Zealand said since the cut-price fares had been announced this morning there was already plenty of interest from consumers.
"People are pretty quick to smell a bargain," she said.
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Post by Dave Homewood on Aug 23, 2007 14:27:32 GMT 12
They may well expand into other centres once established, hopefully. They'd be foolish not to try for the Rotorua and Hamilton markets, and I guess Dunedin too.
I love the way Air New Zealand says there's no room for another domestic airline in an already crowded market - they practically have a monopoly and come out with that rubbish.
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Post by beagle on Aug 23, 2007 17:55:08 GMT 12
Singapore budget airline Tiger Airways is expected to cross the Tasman by the middle of next year, putting even greater pressure on Air New Zealand, according to Centre for Asia Pacific Aviation managing director Peter Harbison.
Virgin Blue's Christchurch-based arm, Pacific Blue, will announce details of its domestic offering in Wellington today.
Tiger Airways, which starts flying in Australia with five aircraft in November, would certainly fly the Tasman and enter the New Zealand domestic market by the middle of next year at the latest, Mr Harbison said.
Tiger chief executive Tony Davis said last month that the open skies agreement between Australia and New Zealand meant that it could fly to New Zealand and Australia, and also domestically in New Zealand.
"We are looking at New Zealand and there is lots of airports in New Zealand that are expressing interest," Mr Davis said.
Mr Harbison said the South Pacific aviation market was in for a major shakeup during the next year, and Air New Zealand's lack of an Australian network could leave it exposed.
Indications are that Pacific Blue will start by flying between Auckland, Wellington and Christchurch, targeting the leisure market, and connecting its existing trans-Tasman and Pacific Island services.
A new domestic competitor has been expected. Both Pacific Blue and Qantas budget offshoot Jetstar have indicated it was only a matter of time.
But analysts had earlier expected that the arrival of Singapore Airlines-backed Tiger would put their trans-Tasman ambitions on hold in the short term at least.
Mr Harbison said Virgin Blue's decision indicated it was moving to build a comprehensive South Pacific network.
Australian-based airlines no longer considered the New Zealand domestic market a standalone market, but rather a vital part of a wider network.
Such a network would make it an attractive partner for foreign airlines that competed with Qantas. Possibly membership of Star Alliance, which lacks Australian representation, would also be an attraction. Air New Zealand is a member of Star Alliance.
A South Pacific network would allow Virgin Blue to reduce its costs by making more efficient use of aircraft, Mr Harbison said.
"Competing against Air New Zealand, in New Zealand, is a tough call because it is a very efficient low cost full service carrier, and it has something like 75 per cent of the domestic market."
But if Virgin Blue could lower costs and increase yields by creating an network that covered Australia and New Zealand, "that really does start to imply that it is a single market".
Virgin Blue's fleet of Boeing 737-800 jets and new Embraer regional jets, which recently began arriving, would give it the flexibility to "quickly move to an array of services" in New Zealand.
Air New Zealand's lack of an Australian network would make it harder to compete regionally, Mr Harbison said.
Air New Zealand could buy Virgin Blue, which majority owner Toll Holdings was keen to sell.
Another way was through a tie-up with Tiger, which is backed by fellow Star Alliance member Singapore Airlines.
"It's time to get big or find a big friend. There is no plan B."
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Post by beagle on Aug 23, 2007 20:22:44 GMT 12
Air New Zealand QANTAS Pacific Blue Kiwi Jet Tiger Airways and now Beagle Air A new full service airline to start plying the New Zealand skies starting in 2008. With the other new players on the block, this service with look after the small towns and build up to main trunk then international. The first new route will be from up and coming Balclutha direct by comfy leather seating, unobstructed views and personal 1 on 1 service to the whale capital of the world, Kaikoura. The B22 is warming up and waiting, so log into www.flyawaybeagle today.... |
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Post by Dave Homewood on Aug 23, 2007 21:37:05 GMT 12
Didn't the Qantas domestic airline in NZ go bust about two years ago?
Beagle Air, all you need to buy is some old Eagle Air planes and add a 'B'.
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Post by beagle on Aug 23, 2007 21:47:46 GMT 12
The old QANTAS was a sort of a franchise owned and operated thing pretty sure people like cliff skeggs was apart of it. tasman pacific airlines comes to mind there. |
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Post by corsair67 on Aug 24, 2007 11:02:42 GMT 12
Well they've had a bonza first hour!
Look out Beagle, you're in for a rough ride! ;D
Pacific Blue declares Kiwi price war
Steve Creedy, Aviation writer | August 24, 2007.
A MASSIVE response that saw 10,000 tickets sold in an hour has been hailed by Virgin Blue as proof that there is a strong market for its new low-cost domestic services in New Zealand.
The airline yesterday revealed that its Pacific Blue low-cost subsidiary would fly on New Zealand trunk routes from mid-November with five flights a day between Auckland and Wellington, three a day between Wellington and Christchurch and two a day between Christchurch and Auckland.
It launched with $NZ39 ($34) one-way fares, which prompted the big response from Kiwi travellers.
Lead-in fares will revert to between $NZ59 and $NZ79, which Virgin says is about $20 cheaper than its competitors.
But Air New Zealand immediately hit back by lowering its lead-in fares and promising it would remain the market leader when it came to everyday, low-cost travel.
"That position is not going to change," Air NZ group general manager, short haul airlines, Norm Thompson said.
Pacific Blue's new services will soak up two aircraft, but chief executive Brett Godfrey said a third was on its way.
"We'll be looking at doing another seven or eight more when the third aeroplane comes on," he told The Australian from New Zealand.
"We're keeping that one a little bit tight at the moment because, to be quite frank, we haven't fully decided whether it will go on these routes or whether it ends up in some of the other longer, thinner routes on the domestic market here."
Mr Godfrey said potential 737 markets included Queenstown, Dunedin and Rotarua and he believed some of the profitable regional routes could be lucrative "down the track" for Embraer services.
However, the airline had no immediate plans to introduce the regional jets to New Zealand and the first 20 planes were all slated for Australia.
"I think what we want to do is walk before we can run," he said.
"We want to have look and see if we can make this work.
"We expect we will struggle for a year or two and if we turn it around after a couple of years and we see opportunities, why wouldn't we look at it.
"But because Pacific Blue is three years old and is going from four to seven aeroplanes - four being trans-Tasman and island operations - we thought it wise that for the next couple of years they just focus on running one type."
Virgin is hoping to gain by being first on the scene with a domestic low-cost carrier and believes high domestic fares in New Zealand relative to Australia made it ripe for the picking.
Mr Godfrey said that even he had been surprised by the response to the airline's launch sale and said he was "absolutely confident" it was going to work.
He also did not agree with Air New Zealand's assessment that there was no room for another low-cost carrier. "The cost base of Pacific Blue is phenomenal," he said, pointing to figures at this week's annual results showing Pacific's unit costs were more than two cents lower than Virgin's at 5.93 cents per available seat kilometre.
"As a result, I don't see it belting up Air New Zealand or bothering Qantas at all.
"I genuinely believe that because of the demographic and the prices of airfares here, we'll be able to get under the radar and create an entirely new market."
Pacific Blue has no plans to follow Virgin's move upmarket and introduce its new world carrier concept to New Zealand.
Mr Godfrey said the airline would not be chasing corporate traffic.
"We operate two airlines in the fleet now and this is purely the low-cost one," he said.
"This what Virgin Blue was seven years ago and it worked so we see no reason to change it."
Air NZ is due to launch a new domestic initiative next week.
It feigned surprise yesterday at how expensive Virgin was making air travel for its customers. The carrier released tables showing its fares were cheaper in some categories than Pacific Blue.
Mr Thompson said the airline had sold seats as low as $NZ1 and said Kiwis had embraced its push to make air travel more affordable, with the number of people travelling rising 40 per cent over the past five years.
But Mr Godfrey was unfazed by the competitive threats.
He noted that he flew up to Wellington from Christchurch yesterday on a discounted ticket costing $272 for a 30-minute flight. "It was kind of funny because the only difference between that flight and what the Pacific Blue flight will be like in three months time is that they gave me a sweet," he said.
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Post by Dave Homewood on Aug 27, 2007 18:56:30 GMT 12
www.1xx.co.nz/stories/news.121223.htmlMP seeks reassurance from Air New Zealand over provincial flight costs 27 Aug 2007 Air New Zealand have been asked by the East Coast Labour List MP for reassurance prices of provincial flights will not be affected by Pacific Blue's entry into the market. The airline is offering low fares on flights in the main centres. Moana Mackey has written to top Air New Zealand management asking for a show of respect for provincial New Zealand. She says they need to appreciate people in these areas are on lower incomes than those in the main centres. Moana Mackey says she's concerned provincial flight fares will be used to subsidize bidding wars on the main routes.
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Post by Kereru on Aug 27, 2007 21:26:36 GMT 12
These cheap fares are going to be good for travellers and we spotters. Just booked one to CHC in November for some spotting. Crikey it is getting to the stage where the flights will be cheaper than parking your car at AIAL for a day!! ;D
Colin
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Post by Dave Homewood on Aug 27, 2007 21:35:17 GMT 12
That's very true re the parking cost Colin! ;D
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Post by flyjoe180 on Aug 28, 2007 9:13:49 GMT 12
All the more reason for another airline to join in domestically then, and ensure that the provincial populace also benefit from lower airfares? Air NZ have been taking people for a ride with airfares for quite a while, it's now cheaper thanks to Blue, to travel between main centres than it is to fly to a smaller city or town.
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