Flying in the face of adversity

By DANIEL RIORDAN, aviation writer

Taxpayers have yet to find out how big a piece of Air New Zealand they will own after further delays in setting the price the Government will pay for its shares.

A decision on the price, which will determine how much the Government ends up with, is due on November 26.

Whatever the final stake, taxpayers will own shares in an airline suffering from a global slump in air travel greatly exacerbated by the terrorist attacks of September 11.

But people wanting to fly to and from New Zealand - with the national carrier or its competitors - still have plenty of choice.

Tourism operators report few concerns about the range and frequency of flights available to their customers.

Fewer flights may be available on most routes, but fewer passengers are wanting to travel on them.

But exporters dependent on air cargo - especially those from the South Island - are worried.

Air New Zealand said late last month that it was dropping its Boeing 767 services from Christchurch and replacing them with smaller Boeing 737s, cutting cargo from 400 tonnes a week to 216 tonnes.

Containers can now be sent only on Qantas flights.

The Boeing 737s can take only packaged freight in cartons up to 35kg. Heavier loads must go through Auckland.

Canterbury Manufacturers Association chief executive John Walley called the decision "probably the worst thing to happen to manufacturing in Christchurch for some time".

Business New Zealand chief executive Simon Carlaw says his members' main concern is availability of cargo space, after the reduction in services and aircraft size.

Fresh fish and flower exporters are not the only ones hurting; manufacturers supplying "just in time" are equally at risk.

Mr Carlaw says the cost of sending air cargo has risen since September 11 as the cost of added security is passed on to customers.

Air NZ increased its cargo charges to most international destinations by 10 per cent this month, and also increased economy passenger fares across the Tasman.

It had already reduced the number of flights to most northern hemisphere destinations and across the Tasman.

Other international airlines operating in New Zealand have done the same.

The cuts were inevitable. Air New Zealand sales and distribution head Norm Thompson says passenger bookings from the US and Europe are down about 10 per cent from December through to February, and Japanese bookings are down 20 per cent.

Against that the outlook is more positive, and traffic from the key Asian markets of Hong Kong, Singapore and Taiwan has been strong.

Other positives include the growing Chinese market. Air New Zealand expects a fillip from the Chinese New Year in February.

Though it has cut flights between Sydney and the west coast of the US, it has added flights between Auckland and Hong Kong, Taiwan and Japan. Some of the increases are seasonal; some replace services flown by Ansett International.

Once the turbulence created by the April collapse of Qantas NZ dies down, the domestic traveller may be flying on different planes, but the range and frequency of services will have changed little.

Domestically, regional airline Origin Pacific continues to cash in on the demise of Qantas NZ.

The airline, started by Air Nelson founder Robert Inglis in 1997, now flies to nine destinations and this year upgraded its fleet.



Qantas's New Zealand marketing manager David Libeau says his airline has no immediate plans to increase its presence here, though it might switch capacity from its Wellington to its Christchurch route to meet seasonal demand.

The void in the Australian domestic market left by the original Ansett's demise has placed heavy demands on Qantas aircraft and that remains its priority.

Qantas flies four 737s on the Auckland-Wellington and Auckland-Christchurch routes, and has a code share agreement with Origin Pacific on three main routes to and from Christchurch.

Qantas attacked Air NZ on price, and Air NZ responded by using its transtasman discount subsidiary Freedom Air on domestic routes.

Freedom flies the three main domestic routes and 12 transtasman routes, concentrating on New Zealand provincial centres.

"Qantas has come at us on price and we've used Freedom as our leisure, low fare vehicle," Mr Thompson says.

He claims Air NZ's overall domestic market share is slightly above its capacity share, and the airline has held on to its all-important business market.

Richard Branson's Virgin Blue is still making noises about flying here - though it certainly won't make it before Christmas - and Mr Thompson says Air NZ is ready.

Like Qantas, Virgin Blue would seem to have its hands full with opportunities in Australia.

Travel Agents Association president James Langton says it is still too soon to know how the airline industry worldwide is going to end up.

But he says the range and frequency of flights to and within New Zealand now is meeting travellers' needs.

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