Qantas Could Cut Down On Jetstar New Zealand Network

Last week, Qantas announced its 2018/19 financial results and it was generally good news all round. The airline was expanding, revenue was up, and all business divisions were making money. It led to a handy AUD$1.3 billion profit for Qantas. But there was one blot of red ink on the otherwise sea of black that is the Qantas balance sheet. Jetstar New Zealand made a loss. For a seriously pragmatic airline like Qantas, it begs the question; could Qantas cut down on its Jetstar New Zealand network?

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Jetstar New Zealand is losing money. Is it on the endangered airline list? Photo: Jetstar via Flickr

Most people will be familiar with the Jetstar brand. It is Qantas’ low-cost carrier offshoot established back in 2003. At the time, a lot of pundits thought it would fail. Interestingly, as a startup, it was under the guidance of now Qantas CEO, Alan Joyce. Unsurprisingly, it prospered and it is now a key player in the Australian domestic aviation market.

Jetstar has become a template for other legacy airlines looking to set up successful LCC operations. Its international services, particularly into Bali and Japan, also do well. It has a couple of offshoots – Jetstar Asia is one, and Jetstar New Zealand is another.

Jetstar domestic operations in New Zealand

New Zealand is an interesting market. Jetstar went in there to commence domestic operations in 2009. New Zealand has a small, fiercely parochial population who generally love local incumbent Air New Zealand. There were approximately 14 million seats sold for flights zipping around New Zealand last year. Air New Zealand has a tidy 80% of that market. Competitors like Jetstar get the scraps. 

Outgoing Air New Zealand CEO Christopher Luxon would be laughing all the way to the bank at that statistic while Qantas boss Alan Joyce will be kicking the dog in frustration.

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Air New Zealand is the dominant player in New Zealand’s domestic market. Photo: InSapphoWeTrust via Fickr.

Given this state of affairs, what is the future for Jetstar New Zealand? Given it is the sole loss-maker for the Qantas group and given that it is such a small part of the wider Qantas group, are its days numbered? There’s certainly some speculation that the airline will undergo some surgery if not outright euthanasia.

Compared to Air New Zealand, Jetstar has limited domestic operations in New Zealand, flying just 17 routes. From its Auckland base, it flies a fleet of A320s and Bombardier Q300s to Wellington, Christchurch, Queenstown and Dunedin. The Q300s go to smaller centers, such as Hawke’s Bay.

The limited scope of Jetstar’s domestic operations in New Zealand puts it at a disadvantage compared to Air New Zealand. Jetstar competes on price and this is where it tries to lures passengers away from Christopher Luxon’s planes.

Competition is good for everybody

A report in CH-Aviation quotes Hastings District Councilor as saying if Jetstar were to discontinue its Hawke’s Bay (Napier) service, it would be a boon for Air New Zealand but a “disaster” for passengers. The smallish community, like many smallish communities, knows fares would hike skywards if the route reverted to a monopoly.

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CEO Alan Joyce is unlikely to accept the current Jetstar New Zealand state of affairs. Photo: Qantas

Qantas isn’t speculating on Jetstar New Zealand’s future. A request for comment by Simple Flying had not been responded to by the time of publication. Whatever does happen, there’s one salient point to make. Everyone likes competition. In aviation, competition offers choice and drives fares down, it’s a win for passengers.

But passengers need to use the competition. It’s no good saying competition is great and then stick with the one airline and then complain when the competition quits and leaves town.

Perhaps Alan Joyce should start an advertising campaign for Jetstar New Zealand – Use it or lose it.

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Stephen

Has anyone ever been able to pay for a Jetstar NZ flight using qantas points and cash. I was unable to do this even though qantas and Jetstar NZ said its possible

Scanman

Jetstar started domestic services in NZ in 2009, not 2015. Services served the main trunk (Auckland, Wellington and Christchurch) plus Queenstown. Regional services to Napier, New Plymouth, Nelson and Palmerston North commenced in 2015.

Hein Vandenbergh

QANTAS can afford the small Jetstar loss in NZ. If nothing else, it’ll keep ANZ honest – though they are a far superior airline. QF feeds trans-Tasman traffic, both ways, into JF and QF resp. Then again, on my frequent sojourns to NZ, I fly ANZ both across the pond, and, in economy, to connecting destinations in NZ. Flights are short, and the lack of legroom for a 1.86 m arthritic male (oh, those marathons in my youth – DON’T DO IT!!!) does not incapacitate me. It’s trying to get into AVIS rental cars, parked idiotically at Queenstown, which does… Read more »

Scanman

Us Kiwis are generally not supportive of Air New Zealand, certainly those in the provinces aren’t due to NZ cutting flights tocertain provincial centres in recent years. Without competition, NZ has a habit of hiking their prices up to take advantage of their monopoly position; this is merely market forces at work I know but it does cause a lot of resentment. Up until the late eighties, the national carrier had very much a take it or leave it attitude to the travelling public. No competition meant no need to lay on those little extras we take for granted now.… Read more »