Air New Zealand regional turbo-prop update

30 May 2016

Air New Zealand regional turbo-prop update

In November 2014 Air New Zealand announced it would move to progressively retire its loss making 19 seat Beech aircraft fleet and move to operating the larger and more economically viable 50 seat Q300 aircraft in regional centres where demand was sufficient to support more sustainable regional services.

At this time it was also announced the airline would suspend a small number of regional routes which were not viable and would work closely with other regional centres to stimulate demand to support the additional capacity offered by the larger aircraft.

Since this time Air New Zealand has invested significantly in regional New Zealand. In November last year the airline announced it would invest in 15 new 68 seat ATR turbo-prop aircraft valued at around $600 million. This investment was in addition to 14 new ATRs already committed to.

Air New Zealand has also recently completed a $1 million interior refurbishment of its Q300 fleet, and a $100 million lounge programme is currently underway which includes significant investment in the upgrading of regional lounges.

Over the past 12 months alone the airline has added nearly 250,000 extra seats to regional services across New Zealand and will add another 400,000 over the coming 12 months. Air New Zealand operated almost six million seats to regional New Zealand ports in FY16.

The majority of regional markets have responded very positively to the changes, for example on the Auckland – Kerikeri route passenger demand has increased close to 15%. In FY16 the airline operated 21,000 more seats to and from Kerikeri than in the previous financial year.

Between Auckland and Rotorua Air New Zealand operated 15,000 additional seats in FY16 compared with the previous year and passenger demand has increased by 15% in response.

Unfortunately the loss making Whanganui – Auckland and Blenheim – Christchurch services do not have sufficient passenger demand to sustain a 50 seat aircraft service, despite the continued efforts of Air New Zealand and local stakeholders. Air New Zealand has made the decision to suspend these services on 31 July this year.

General Manager of Networks, Richard Thomson, says Air New Zealand looked closely at the Whanganui – Auckland service when the regional network was reviewed in 2014.

“While the service was marginal at that time we believed it was worth taking a chance on Whanganui and working with the local community in an effort to stimulate demand.

“Unfortunately the market dynamics have changed markedly since then as a result of competition entering nearby Palmerston North just 70 kilometres away. The greater number of destinations, higher frequency of service and wider range of connecting options on offer at the neighbouring airport have unfortunately served to undermine demand for Whanganui services and we’ve seen customers effectively voting with their feet and using Palmerston North rather than Whanganui Airport.

“Despite almost halving the average fare on this route we’ve been unable to create sufficient additional passenger volume to sustain an ongoing service and unfortunately this means we will cease operating to Whanganui.”

Air New Zealand will also suspend its loss making service between Blenheim and Christchurch from 31 July, as a result of insufficient demand. Blenheim’s services to Auckland and Wellington however will be strengthened in the coming year, with increased frequency and 35,000 additional seats in FY17.

Customers booked to travel on suspended services past 31 July will be offered the choice of a full refund or travelling via an alternative port. More information can be found here.

ENDS

© Scoop Media