Aviation, tourism and energy writer for the Business Herald

Why Qantas is expanding in New Zealand

Qantas head of international and freight Gareth Evans.
Qantas head of international and freight Gareth Evans.

Qantas is boosting services across the Tasman, continuing strong growth over the past 18 months as it moves through a $2.24 billion-plus transformation programme.

The airline, which celebrates its 96th birthday today, is starting a new Christchurch-Melbourne service on December 4, in the past month has increased services from Brisbane to the southern city from three to daily. It will also use a larger plane to fly from Sydney to Auckland during the summer peak, moving up from a Boeing 737 to an A330.

Qantas has flown here for the past 76 years and the airline's chief executive of international and freight, Gareth Evans, said it had increased its transtasman capacity by 10 per cent to meet growing demand during the past 12 to 18 months.

Evans described forward bookings on the Christchurch-Melbourne service as "unbelievable - It really is exceeding expectations".

The airline now flew 11 routes between the two countries and he told a Trans-Tasman Business Circle event that New Zealand was a key partner in its global network.

It also had about 600,000 frequent flier members in this country.

It had been able to increase services by making better use of aircraft, rather than expanding the size of the fleet which serves New Zealand.

It had cut turnaround time for its 737s on its Australian domestic routes from 45 minutes to 35 minutes by better co-ordinating the suppliers and staff who service aircraft.

This week's earthquakes in New Zealand had not had an impact on bookings although it had allowed passengers more flexibility if they had to change their plans, he said.

Evans said there had not been a great deal of inquiries about the earthquake and airlines were affected by a range of events, including geopolitical and geological.

"It's a challenging business to be in," he said.

What we have is a huge opportunity in Asia. What we are seeing is a re-balancing of demand ... that plays into Australia and New Zealand's strengths.
Gareth Evans, Qantas

Evans has been with Qantas for the past 17 years which has included years of record post-float losses, and, in the past year, record profits.

"We are all operating in an unpredictable and rapidly changing world.''

Evans said Qantas' strong position in the Australian domestic market and its loyalty business - where it sells points to third parties - was responsible for about two thirds of revenue. Its international business was more exposed to cyclical variation.

Qantas had pulled about A$1.6b ($1.7b) out of the business in the past two years and another A$500 million in the current year.

"No part of the business remains untouched by that."

He said the transformation programme was not just about cutting costs but also involved investing in new planes, lounges, forging new alliances and overhauling the culture among its 25,000 staff.

"Qantas is undergoing what I would call a cultural revolution. It takes time we're only a portion of the way through it - there are many years to go."

Small changes for the customer - such as improving business-class service on transtasman flights - was as much a part of changing the culture as investing billions of dollars in new equipment.

He said New Zealand and Australia stood to benefit from the surge in tourist traffic out of Asia, and China in particular during the next decade.

The Chinese middle class is forecast to grow from about 200 million people to 800m during the next decade.

"What we have is a huge opportunity in Asia. What we are seeing is a re-balancing of demand... that plays into Australia and New Zealand's strengths."

Nearly a third of tourists from the United States visited both Australia and New Zealand and while there would be competition between tourist authorities and "brutal" rivalry between airlines, both Anzac countries were benefiting from the trend.

- NZ Herald

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