Air New Zealand is to cut back on services across the Tasman Sea from next April.
This follows a decision by the Australian Competition and Consumer Commission not to allow Qantas to collaborate with ANZ on flights between Australia and New Zealand. Although the two carriers have 80% of the market between them, competition from Aerolineas Argentinas, Emirates and Lan Chile, has distorted the market says ANZ.
Air New Zealand will reduce seat capacity on the Tasman by 11% from April next year. Shorthaul Airline group general manager Norm Thompson notes that there is insufficient demand to justify retaining capacity at the same level as the previous April to October period (known as the Northern Summer schedule). Compared with the same period the previous year the number of seats available between Wellington and Australia will fall by 15%, Dunedin 28%, Palmerston North 15% and Christchurch 7% from April 2007.
”The Tasman is one of the most brutal aviation markets in the world and all carriers struggle to make an adequate return on their investment. Unfortunately, not even the low airfares generated by significant excess capacity and competition have driven enough customer demand from these four centres to maintain the status quo schedule on a year-on-year basis. For example, Air New Zealand load factors out of Wellington over the low demand season averaged only around 63%, which is commercially unsustainable,” Mr Thompson says.
The major changes are from Wellington on the Southern Island where services to Sydney reduce from 12 to 10 per week, to Melbourne from seven to five and to Brisbane from daily to six. From Auckland there is no change in frequency but seat capacity falls by 11% due to use of smaller aircraft.
Mr Thompson says despite the reduced capacity between April and October next year, Air New Zealand remains committed to the Tasman.
”The Tasman represents 20% of all Air New Zealand flying. We still have more capacity on the route than any competitor and we are determined to grow demand but not at the expense of destroying shareholder value,” he said.