teambwr47

Looks like the domestic flight market is about to hot up......


Virgin Take on the NZ domestic market

Colin in the middle

Cant see it happening in the way it did in the UK and Europe if that what people think is going to happen.

Qantas pulled out of the NZ Market becuase the routes were uneconomical, that plus they are targetting the larger Jet Market means the benefits will only be felt in 5 destinatiions which Air New Zealand will be able to compete on.

List of Failures in the New Zealand Domestic Market in the last few years
Origin Pacific
Qantas New Zealand (seperate Arm of qantas)
Ansett New Zealand

Reality is you wont see cheaper fares especially with rising oil costs and the and the Kiwi dollar losing strength against the US$.

Bums on seat is the reality and there is not enough people in New Zealand to satisfy that demand.

brussels_sprout

They have been talking about $1 introductory flights, I think that it is OBVIOUS that it WILL reduce fares on domestic flights. IT'S ABOUT TIME THAT the Air NZ monopoly has been broken! Also it will be possible to emigrate to NZ using LowCost flights now, i reckon 150 pounds + tax from London to NZ !

Bums on seats ? The only reason people don't fly domestically is because it is soooo expensive, Air NZ will fly empty rather than reduce their prices. I suppose that because NZ has very low unemployment, most journeys will be around the weekend however. How many will fly from Gisborne to New Plymouth on Wednesdays mornings, say ? That is another matter, but presumably VirginBlue will only operate on the backbone services between the main cities.

Other failures , of course, were due to Air NZ drastically reducing their prices ONLY on the competitive services to force the other airline out of business. Normally the government stops such monopolistic practices, but Air NZ is owned by the government, so they are never going to intervene. Keeping Air NZ a monopoly raises more money for them to spend on the health service for the NZ people(howls of sarcastic laughter)

teambwr47

I think you may be pushing the dream envelope a bit with the last bit but i'm sure the domestic prices will come down. Competition usually means lower prices and hopefully the internet will be next and free broadband is somewhere down the road......

Colin in the middle

I know enough about the aviation industry in new Zealand to watch with some sceptisism on the sidelines as to how long this will last.

Likes been said the new service will operate on the backbone maincentres routes where there is enough capacity to support another airline.
Regional Airports dont support such a demand. I dont think it has anything to do with how much employment there is in New Zealand as to why Regional airports are not busy.
Origin Pacific is a good example of how to fail in the New Zealand Market, they offered cheaper fares than Air New Zealand and still could not fill the seats. Air New Zealand has a markable advantage not just being owned by the goverment but by the use of Loyalty points gained from its Star Alliance partners.
What annoys me most is the Air New Zealand advertised Super Saver Fares are sold out months before the intended date of departure from some locations, yet on the day you get on that plane and there only 5 passengers.

The other point raised by Brussel Sprout Not many simple answer becuase you cant fly Gisborne to New Plymouth without transiting Wellington or Auckland. But you can via a charter and charter carriers are the market in New Zealand. If you could fly direct well would that Airline survive on a scheduled service? Answer is no simply because there are only 4 million people in New Zealand not the fact of low unemployment.

Fares will go down but at what cost? Origin was killed by a rising Oil Price and fares that just could not cope, Qantas has pulled out of the Domestic NZ market which has allowed this Virgin to move in. Will Virgin make a differance to the NZ flying market? I think not.

brussels_sprout

LowCost emigration ?
I have seen the following low-cost flights, and they are available now !
Price in GBP

London -> Hong Kong 75 (Oasis HK Airlines)
HK -> Singapore (JetStar Asia) 30
Singapore -> Darwin (or Perth) Aus (Tiger) 20
Perth or Darwin - NZ - I was estimating 25-40

Hopefully, NZ flights will be the same sort of price range, the announcements will be on Thursday

Regarding Colin's points, i was only choosing those 2 cities to make a general point that there will not be much traffic between 2 small regional cities.

Employment :- I am just thinking of people like me, who would take advantage of cheaper fares, but because i work Monday to Friday i can only travel at weekends, that is the same for the vast majority of people .

Qantas :- All the flag-flying airlines are in "cahoots", they code share and never tread on each other's toes, i.e a cartel

Frequent Flyer Points ? :- This is a marketing device mainly for the people who can CURRENTLY afford to use Air NZ. I would NOT buy a flight based on any silly points scheme if a competitor offered a flight that was MUCH cheaper, would you ?

As i said before, the main reason that competitors failed, is that Air NZ simply cut the fares on competitive flights TO NON-PROFITABLE LEVELS, and the government let them ! SUch Anti-competitive behaviour is normally stopped by the government, but the government OWNS airNZ.
There are many small countries that have competition, this is often used as an excuse to carry on national monopolies in NZ (Telecom too!). It is just subterfuge

teambwr47

Good searching indeed well done on that

I think Colin you are under estimating how aggressive the Virgin companies can be in the pricing of what they provide. Virgin Blue seems to have had a substantial effect on the Aus market and are no doubt a huge thorn in the side of Quantas and hopefully they will make an equally good go at the NZ market.

Going off the point a tad but if you've not read the Richard Branson autobiograhy then do its a great read.

happynz

Wow, that'd be amazing if one could fly NZ to Darwin or Perth for 25 - 40 (pounds?). As it stands now flights between Auckland and Darwin are NZ$500 to NZ$1250 one way.

Colin in the middle

Yea but your also underestimating how the aviation industry works in New Zealand compared to the much larger market of Australia. If Air New Zealand is threatened on its own back door then you would see some pretty aggressive tactics which Air New Zealand would win.
Lose Air New Zealand you lose the identity of New Zealand and that will never happen as it stands Air New Zealands capacity on its domestic market increased and Air New Zealand are chartering Vincent Aviation and Air National to fill that capacity.
These Charter Airlines are in a nice position to survive and Air New Zealand can afford to lose capacity.
Unless Virgin moves into the regional Market rather than fly jets on the main hub route then it will make little impact, quite possibly the regional market would suffer.

Cheap deals are non sustainable.

brussels_sprout

I seem to remember the same thing said about Ryanair fares !

But in NZ, the government WANT to maintain the Status Quo, and have a vested interest in doing that. There is no equivalent of the European Union to enforce competition, that's all.

YOU CAN FLY FROM LONDON TO HONG KONG FOR 75 pounds, many internal (cheapest) NZ fares cost much much more than that. It does not have to be like this ! (WLG to AKL on Fri evening - cheapest 419 NZD for a 1 hour flight !)

Identity of NZ ? All the NZ banks were sold off to Ozzie ones, many supermarkets are OZzie owned too, NZ Telecom competition with Ozzie TelstraClear is here and prospering. Warehouse stuff is 99% Chinese made

Of course, NZ must have a national flag carrier, but it remaining a monopoly is not in the NZ people's interest

Colin in the middle

Will see

Since its a 1-2 hour drive to the nearest regional airports not exactly going to make much differance to myself. If I want to go to Wellington its either leave Early in the Morning from Wanganui and get back late evening or drive up to Taupo for a midday flight. Other than that could fly to Auckland!

Given it would take 2 hours to Wanganui for me then another 30 minutes waiting to board plus 1 hour flight thats 3 1/2 hours in addition to having to secure public transport (taxi from the airport to destination) all in all its quicker and cheaper to drive.

Where is the New Zealand Market? Virgin is not targeting that regional Market because it knows it can not win in that market. With Just three main Centres and tourist centres of Rotorua and Queenstown that market is limited to Transit Passengers.
Part of Origins downfall was losing its partnership with Qantas on those routes, proving sustainability of a regional market to more than 2 players is risky.

Trying to say that the model used in Europe or Australia will work here is simply laughable.

Where are thes 75 quid London Hong Kong fares? Who is the carrier and whats there safety and maintainance record like?

You gave Ryanair as an example! When I lived in Plymouth the only airline flying out of Plymouth was British Airways now that route has been filled by Air South West after BA withdrew. No competition on that route. Then Ryanair annouced flights from Stanstead to Newquey only problem for them is those cheap fares were not sustainable because of the bums on seats making it a loss making route and they were tied to a 737 Jet Aircraft. Not even sure they fly that route anymore?
Tell me of a domestic fare within the UK that joins a regional Airports flown by one of the cheap carriers?

Because they (virgin) are not flying the regional market place I can not see how they would have impact to the fare pricing in New Zealand unless your flying just the main centres. Take into the equation that you have to get to those Main Centres or from them the cost saving is minimal which in turn means people wont use the cheaper service.

Given the fact I have over 1,000 Airpoints accumulated consisting of just 238 remaining from my flight 4.5 years ago the balance from BNZ Credit Card points. I have never paid for a Domestic airfare within New Zealand thanks to this clever marketing tool of which I have flown several.

But much like the BA Airmiles I collected being able to use the destinations never have been of much used to me compared to driving. They will be used how depends on the day and the deal. Ironic that I have over 800 points and not flown to gain them.

When I see a Virgin plane fly into New Plymouth, Taupo, Wanganui, Napier, Gisborne, Kerikeri, Timaru, Greymouth or Hokitika etc then I know that competition has arrived.

brussels_sprout

I don't know where exactly where you are looking , but the Cheapest ticket that i can CURRENTLY find is Darwin -> Brisbane -> Auckland is 100 Pounds = NZ$270 using Virgin Blue and FreedomAir !
I reckoned on the price reducing after Virgin Blue ($1 Introductory flights !!! )

London to Hong Kong for 75 pounds (Oasis Airlines Hong Kong) has been operating with brand new Jumbo jets without problems for quite a few months now and is due to expand to other European and American cities !
http://www.oasishongkong.com/gb/en/home.aspx

brussels_sprout

Hi Colin,
I was agreeing with you about regional airports off peak, yes it would be difficult to operate, but Virgin do not operate like that in Oz either (or Ryanair)

Colin in the middle

Did you see the 6pm News tonight about it?

Guy the spoke with shares the same view as I do that it wont last and strangly enough basically said the same things.

brussels_sprout

Maybe you're right, Colin, meanwhile i have just reserved a Friday evening peak time flight with Virgin, 4 seats WLG-AKL @ 39 dollars !!!!!!! Hooray, first visit to Auckland !!!!

Of course, AirNZ will be FORCED to reduce their prices for a change !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!