Mate v mate over the Tasman
Travel bubble revives competition between Air NZ and Qantas group
On the face of it, Australasian cousins Air New Zealand and the Qantas group are happy playing nice. There was a jokey pavlova exchange between their bosses, and a deal where Qantas group passengers can use Air New Zealand lounges in this country, with the possibility of a reciprocal deal in Australia.
That followed a 2018 agreement to codeshare on each other’s domestic routes, and co-operate in other ways including research into biofuels — but with a pledge to compete fiercely on the Tasman. And they’re living up to that promise.
On the Tasman — traditionally one of the world’s most competitive airline routes — both Air New Zealand and Qantas group have roared back into life with the resumption of quarantine-free travel.
And off the aircraft they’re trying to lure each other’s high value customers with sweet deals to join their respective loyalty schemes.
Air New Zealand’s published schedule has allowed for about 150 flights a week across the Tasman in the early days of the bubble, with more to come, and Qantas has about 100.
Jetstar, which has been in Air New Zealand’s domestic home patch for 12 years, is operating at a little over 40 per cent of pre-Covid capacity across the Tasman but will add more seats when demand picks up.
The airline is wholly owned by Qantas and has built back to 80 per cent of pre-pandemic flying in New Zealand out of Auckland, Wellington, Christchurch, Queenstown and Dunedin.
Jetstar chief executive Gareth Evans says the New Zealand domestic market is still softer than at the same time in 2019, but with its Tasman flights acting to feed more passengers onto planes in this country, the outlook is improving.
The airline employs about 280 staff in New Zealand and all pilots and 75 per cent of cabin crew are back at work, he says.
“We want to get our people back to work – our people have been phenomenal. It’s been an incredibly difficult time for all our people in all of the countries . . . and nowhere more so than in New Zealand,” says Evans
Before Covid-19 the airline flew to 85 destinations in Australia, New Zealand and Asia, with a fleet of close to 140 aircraft, mainly Airbus A320 and A321s.
But because aviation markets such as Singapore and Japan had been hit harder by the pandemic, Jetstar has been able to redeploy aircraft to its home base.
“It’s a real advantage to be able to shift, not only with aircraft types in Australia, but across countries where it could be some time before they return to full flying.”
And while the fleet is mainly narrow-body planes, Jetstar also has 11 Boeing 787 Dreamliners, five of which are being brought out of hibernation to use on Australian domestic routes.
Evans says it is possible the planes could be put on the Tasman if demand is sufficient.
“We will see how things develop – if the demand is there, we will look to put in supply. If we think we’ve got demand across the Tasman to fill a 335-seat aircraft, we might well do that.”
Just before the pandemic hit, Air New Zealand had a 37 per cent share of capacity on the Tasman, Qantas had 26 per cent, Virgin Australia 18 per cent, Jetstar 10 per cent and the remaining 9 per cent was shared between other carriers.
Virgin Australia has delayed reentering the Tasman until September, with some flights to Queenstown, and the end of October for a more extensive network.
This has provided an opportunity for Air NZ, Qantas and Jetstar. Evans says he is surprised Virgin has stalled its re-entry.
“For us, we focus on what we’re doing. It’s up to them to decide what they do with their business [but] it is a bit of a surprise. I would have thought that any airline would look to take opportunities in any market that opens.”
In 2019, 6.4 million passengers flew between Australia and New Zealand, according to OAG Traffic Analyser.
Of these, 3 million had a point of sale in Australia, or 47 per cent.
In 2020 this number fell to 1.5 million, just 24 per cent of the year before. Airlines had only a quarter of the year in which to operate normally.
The OAG figures show that from April 19, the number of scheduled flights across the Tasman increased to 307 from 97 a week earlier, and the number of routes operated will rise from 11 to 16.
According to one provider of global travel search data, 3Victors, the number of online searches for Australia-New Zealand travel rose by more than 900 per cent between the week of April 5 and the week of April 12.
However, demand may not be as high as airlines were hoping for.
Just a week before the launch of the quarantine-free bubble, scheduled airline capacity was showing in the OAG database as 455 flights for the week of April 19.
Taking out 148 flights within a week of operation demonstrated the uncertainty in the market and the lack of consumer confidence, OAG said.