KEY POINTS:
You have to hand it to British aviation tycoon Sir Richard Branson. A flying visit to the country to celebrate his Pacific Blue airline's third birthday generated media coverage of the sort that only the most inveterate self-publicist could generate. He said and did little of great note,
yet he left New Zealanders feeling gung-ho about his business empire starting a new domestic airline and providing financial backing for biofuels research.
According to Sir Richard, a domestic airline service will be up and running "before my next visit [to New Zealand]". That means nothing in particular, but it was an astute enough response from a businessman who doubtless understands the difficulty of such an undertaking. New Zealand's aviation history is littered with failed domestic airlines, the most recent being Nelson-based Origin Pacific. Taking on Air New Zealand is a difficult proposition because of the small market, the erratic passenger numbers on many routes, and the strength of the incumbent.
Sir Richard knows the success of a domestic airline will depend on its ties to Pacific Blue's operations on the Tasman route and further afield. Origin Pacific failed because a code-sharing partnership with Qantas was lost when the Australian carrier began pursuing an alliance with Air New Zealand. Dependence on this sort of arrangement has been a common failing. That is why Sir Richard said domestic flights would not start until Pacific Blue had 20 per cent of the transtasman market. It now has only half that.
It should be remembered that much was expected when the Virgin Group announced Pacific Blue would start flying the Tasman. Lower-cost travel from New Zealand's biggest cities to Sydney, Melbourne and suchlike seemed within reach. But, in its first three years, Pacific Blue has cherry-picked its routes. The expected competition on most major routes, which Air New Zealand and Qantas cited in their unsuccessful bid to persuade competition regulators to approve an alliance, has not eventuated. Competition has come from airlines such as Emirates, not Pacific Blue, a dedicated transtasman operator.
Nonetheless, Sir Richard claimed "some good competition" had begun, and that his airline planned to put on more flights and to fly more transtasman routes. All that was holding Pacific Blue back, he said, was a lack of equipment, and the airline was trying to obtain more Boeing 737s. That, and a greater international presence by Virgin in the Asia-Pacific area, will be the necessary precursor to the start of domestic operations.
Even then, the skies will be far from clear. On its Australian routes, Virgin Blue has struggled to win business travellers, who have been content to stay with Qantas because of its long-haul offerings. It is unlikely to be much different in New Zealand, where Air NZ is also active in the economy side of the seating equation. Notably, Qantas has stopped flying between Wellington and Christchurch, citing competition and declining passenger numbers. In essence, the Australian airline is now picking and choosing its routes.
If Qantas' presence continues to diminish, there would be an obvious opening. Sir Richard's name is a powerful marketing tool, and his arrival in the domestic market would create a stir. Most of all, people would welcome competition, and the prospect of lower prices, more flights on regional routes, and better service. At the moment, however, it is important to listen to Sir Richard's words, not the hoopla that surrounds them. These were couched not in airy-fairy notions, but in the language of business.
