Carry on: Regional fliers getting better deal already

Air New Zealand is cutting fares to potential Jetstar destinations such as Nelson.

Regional air travellers are already seeing the benefits of looming competition in routes and extra capacity.

Jetstar will next month announce its chosen routes for its ex-Qantas Bombardier Q300 50-seater aircraft while Air New Zealand [NZX: AIR] is cutting fares as its ATR 72s carry more passengers and reduce operating costs.

Air New Zealand also has a fleet of 23 Q300s against Jetstar’s five.

On the fringes, new and smaller airlines are expanding on routes from which Air New Zealand has withdrawn. These won’t be subject to competition but some operators have promised fixed fares.

Centrally-located Nelson is the biggest winner so far. Air New Zealand has lowered its fares to Auckland, Wellington and Christchurch from mid-October, ahead of the introduction of Jetstar’s potential services.

Nelson comes top of one assessment of the busiest regional routes likely to be chosen by Jetstar. The country’s busiest regional routes are Auckland-Nelson, Auckland-Palmerston North and Christchurch-Palmerston North.

Originair takes off
Nelson-based veteran industry man Robert Inglis this week launched single-aircraft owning Originair with a daily service to Palmerston North, a route dropped by Air New Zealand.

Palmerston North is likely to be the second of Jetstar’s picks ahead of Hamilton, Rotorua, New Plymouth, Tauranga, Hawke’s Bay and Invercargill – and four of those will miss out the first time round.

That leaves a choice of two more North Island airports (Hamilton/Tauranga/Rotorua and New Plymouth/Hawke’s Bay) or one in the North and Invercargill.

Originair’s next destination will be Nelson-Wellington in September. Mr Inglis founded Origin Pacific Airways (1996-2006), which operated out of Nelson, as well as Air Nelson in 1979.

Air Nelson eventually became an Air New Zealand subsidiary while Origin Pacific failed after losing its Jet Connect (now Jetstar) contract as a feeder airline to Qantas.

Jetstar surveys travellers to the regions
Jetstar this week released the results of an online survey of 900 recent air travellers to the regions as part of its research into which of the four airports they will select.

Not surprisingly, all wanted cheaper fares and more competition, giving Jetstar the weight of public opinion when trying to get the best deal from council-controlled airports.

The survey found two-thirds of those surveyed didn’t think they got value for money on regional routes and the same proportion of travellers based outside Jetstar’s four main-trunk destinations made a road trip to save money on domestic trips.

Meanwhile, Wellington-based Sounds Air has added Taupo to its network, which spans Wellington, Blenheim, Nelson, Picton, Westport and Kapiti.

Sydney-Bali attracts fourth airline
Indonesia AirAsia X will start flying between Sydney and Denpasar from October 17. It will compete against three incumbent airlines – Jetstar, Garuda Indonesia and Virgin Australia, which also operate flights under the Tigerair Australia brand.

The introductory fare of $A119 one way for the five flights a week service is significantly below those of existing airlines.

Boeing confident of demand
Boeing says demand is still strong for civilian aircraft and it is under pressure to increase its production rates, despite concerns about slowing growth in China and several years of record aircraft orders.

"We're not seeing a slowdown in demand," chief financial officer Greg Smith told an investor conference. Airlines from many countries were buying significant numbers of planes to replace old aircraft, providing "more confidence in this cycle."

Some investors have expressed concerns that the cycle has peaked. Cutting production costs on the 787 Dreamliner is a top priority. Each 787 costs about $US260 million at list prices but it continues to lose money.

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