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?
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.
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.
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.