Air NZ lures Japanese with $5.5m discount

By DANIEL RIORDAN

Air New Zealand is slashing $5.5 million off its fares from Japan and selling its Australian-based travel business Jetset as it continues to streamline its operations.

The move to revive the slumping Japanese market comes after Government figures showed Japanese visitor numbers in October were 20 per cent lower than a year ago. Japan is Air NZ's second-biggest market after Australia.

The fare discounts are in conjunction with Government initiatives announced yesterday by Tourism Minister Mark Burton. They include the Government spending an extra $2 million on marketing in Japan, with about $5 million expected to be spent by Japanese travel agents.

Mr Burton said 21,000 fewer Japanese visitors were expected in the next four months and the package of incentives aimed to recover about 8000 of those.

Jetset is the second Air NZ business to be put on the market after its South Island skifield operations, which are thought to be worth only several million dollars. The sale of both businesses is at an advanced stage.

The company says all other non-airline assets are up for review, but no decisions have been made on what might go.

However, the airline's 49 per cent stake in the Christchurch Engineering Centre, a joint venture with US company Pratt & Whitney, is not under review. A decision on its future was up to Pratt & Whitney, airline spokesman David Beatson said.

Jetset has offices around Australia and several overseas. It includes retail, holiday and business units. It was reduced in size two years ago and lost $34 million in the 1999 financial year. Management said then it was not expected to return to profitability in 2000.

Citing sensitivity around the sale process, Air NZ yesterday was unable to provide more recent figures on its size and performance.

Meanwhile, Air NZ executive director Roger France says it is too early to say if the airline will call on the extra $150 million the Government said it would make available if needed. That money would be on top of the $885 million of taxpayer funds already pledged.

"We haven't factored that into our planning yet. But it helps us get close to a good, sound, properly geared balance sheet, and it also provides us a measure of comfort."

But Mr France was adamant that measure of comfort did not extend to the airline losing its commercial focus in the knowledge that the Government would not allow it to fall over.

"The Government has a position in a listed public company. It wants to see the company run properly and wants a business plan that makes sense. I believe that's where things are at now."

Mr France said he was not in a position to provide operating statistics beyond the last market update - for the September quarter - given four weeks ago.

Air NZ lost about $27 million at an operating level in September, and $52 million over the quarter.

The airline is expected to update the market at its annual meeting on December 19, when shareholders will be asked to approve the rescue package.

But Mr France said the onset of the airline's peak season gave it some breathing space before determining what its medium and long-term capacity should be.

"We won't have the benefit of that forever. We're using this time to think deeply and carefully about exactly what the right capacity and initiatives would be."

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