Jetstar worth $40m boost to the regions
"Jetstar has expanded the visitor market by making flying more affordable." Benje Patterson of Infometrics
More people are flying to the regions and spending more money there after Jetstar added four regional destinations in the last year, an economists’ report has found.
The $40 million boost could soar higher still, as the airline ponders what it called the ‘‘quite possible’’ addition of more regional destinations.
It has been nearly a year since Jetstar began flying from Napier and Nelson to Auckland, and about nine months since it added flights to New Plymouth and Palmerston North, as well as a Nelson to Wellington service.
The airline now operates up to 244 flights a week on its regional network, resulting in a fare war with Air New Zealand that has seen some prices slashed by up to 40 per cent.
Jetstar’s arrival has led to passenger numbers rising by more than a quarter at those four airports, a report from Infometrics found.
Furthermore, the regional economies have had a collective boost of about $40m.
Infometrics senior economist Benje Patterson said Jetstar had brought competition which reduced airfares and improved connectivity, an important driver for economic activity in regional economies.
‘‘We’ve seen visitor numbers grow in greater numbers than Jetstar’s additional flights, suggesting that rather than simply cannibalising the incumbent’s passenger base, Jetstar has expanded the visitor market by making flying more affordable.’’
Jetstar Group chief executive Jayne Hrdlicka said the airline was ‘‘overwhelmed’’ by the response to its regional routes.
Auckland to Nelson, a region found to have been boosted by about $17.1m, was the most popular route, followed by Hawke’s Bay, which had added about $8m.
Hrdlicka said the impact was in line with expectations and similar to those seen in Australia.
‘‘We weren’t surprised, but we were delighted because this is a part of the market we haven’t served before and we just wanted to make sure we were having the impact that we expected to have.
‘‘We are bringing down prices, sustainably, and we are making things possible for people that otherwise weren’t possible because airfares are now affordable.’’
About $10 was estimated to be added to an economy for every $1 spent with Jetstar, but Hrdlicka said it was ‘‘clever math’’ to suggest the new routes had therefore been worth about $4 million to the airline.
‘‘We won’t talk specifics on financial performance, but we added 600,000 seats to our New Zealand business in adding regionals, which is big growth for us.’’
Hrdlicka said the routes had been popular among leisure and business travellers alike, and the response to Jetstar’s flexible business fares, announced in September, had been better than expected and stronger than any of its markets in the world.
It was ‘‘quite possible’’ the airline would add more regional destinations, she said, and noted it was a long-term investment for Jetstar.