Cut-throat competition between airlines flying transtasman has forced Emirates to axe its services from Auckland to Australia.
The airline says the route was no longer viable, partly because of the success of its non-stop flights to Dubai, but also because of the flood of competition during the past five years which had pulled down fares and airline yields. Both could rise following the Emirates announcement.
During the last five years the number of seats on the Tasman has grown from 8.2 million to 10.2 million, according to Qantas which will put on more aircraft between Auckland and Melbourne and Brisbane to partly fill the gap left by its commercial partner.
Emirates has flown Auckland-Australian routes since 2003 and until this year had grown quickly to at one stage having four A380 superjumbos in Auckland at one time each afternoon. Earlier this year it quit flying to Sydney and beyond from Auckland, and it will end its other transtasman services next March.
It will retain its direct Auckland-Dubai flights and services from Christchurch to Sydney and Dubai.
Airline president Sir Tim Clark said the services using A380s - which had a big upstairs business and first class cabin - couldn't be sustained.
"Of course I'm sad at that because I know it was hugely popular but unfortunately it was just the revenue cost equation not stacking up - its a very price-sensitive market and we had to recognise that fact. An A380 that cost us a lot to operate an hour with all these premium products in place," he told the Herald.
"It's become quite a difficult market because there's been more entrants and more capacity on the route."
The airline has been flying directly to Dubai since last March and this had drawn passengers wanting the non-stop service from the Australian services.
Qatar Airways is also flying directly to the Middle East and Asian carriers are beefing up operations in New Zealand as aircraft technology improves and the appetite grows for non-stop travel, rather than stopping in Australia.
Clark said it was possible Emirates could start another non-stop service to Dubai from Auckland, although no time frame had been set.
"The planners are looking at this. The transtasman was looking a little bit shaky," he said.
"If I look at the cities where we've had direct operations with one plane we generally have another A380 going there. In Auckland that would probably scare the pants off a lot of people."
Qantas chief executive Alan Joyce said rationalisation on the Tasman was inevitable.
"With all of the extra airlines coming in over the last few years you've had growth of nearly three to eight per cent every year. That is very high growth compared to anywhere in the world."
The changes from March next year mean Qantas will increase the frequency of its services between the two countries, adding seven new return flights per week between Melbourne and Auckland and an extra two return services a week between Brisbane and Auckland.
Some of these services will be up-gauged from a 737 to a wide-body A330 aircraft, now being used on some Auckland-Sydney flights.
While other industry figures say fares could rise as a result of the reduction in seats, Joyce said extra efficiencies sought by airlines of authorities on either side of the Tasman could reduce costs for airlines.
Regulatory approval in both countries is needed.