Extra capacity in the market should bring down fares, Tully said.
“The rule of thumb is that with more capacity prices should come down. I think we’re really proud of that role here.”
Jetstar has been operating domestic flights in New Zealand for 15 years, including nearly four years of regional services until the the unprofitable routes were cut in 2019.
Jetstar’s main-trunk flying was profitable, although this hasn’t always been the case, Tully said.
While domestic demand for travel by businesses and government agencies was soft - badly affecting Air New Zealand - the leisure market was holding up. Because Jetstar targets the “price-sensitive” segment of the market, it was also getting more small business travellers on board.
“I think that’s part of the beauty of being in that position in the market where you’re the leader, because, even if there is more sensitivity to price, you’re still a good option.”
She said increasing capacity gave Jetstar the opportunity to make more money out of volume and continue to look for new ways of adding optional ancillary charges.
“We would say it’s really important to stay true to your DNA and low-cost carrier principles because that means you’re keeping (controls over) your cost base strong, which means you can keep offering those differentiated fares in the market. Managing your cost is critical to our success.”
Improved reliability had helped win more travellers in the New Zealand market, Tully said.
The airline has a base in Christchurch and employs 350 staff in New Zealand and this would grow as flying increased.
Today’s announcement includes two extra domestic flights a day for the airline whose jet network here is about a third the size of Air New Zealand.
Jetstar will fly year-round three times a week between Auckland and the Sunshine Coast (Maroochydore) from December and three times a week between Christchurch and Cairns from next April.
Air New Zealand today said it would from Wednesday recommence its three-times-a-week Auckland-Maroochydore, a seasonal service which runs until October.
Tully would not be drawn on which transtasman routes Jetstar will announce next but it wasn’t constrained like its Kiwi rival by engine problems for its domestic and long haul fleet and it was getting steady delivery of next generation A320/21 aircraft into its fleet.
It was building up a strong base in Christchurch.
“Having another aircraft based in Christchurch, as well as the launch of new flights and capacity, will help establish the city as a major gateway for Jetstar in New Zealand, providing more choice and great low fares for South Island residents.“
In addition to the new routes, Jetstar will adjust its Christchurch to Melbourne flight times to improve connectivity to its long-haul international network. This will provide better access to Jetstar’s flights between Melbourne and Asia, including Ho Chi Minh City, Phuket, Singapore, and Bangkok, and enhance inbound tourism to the South Island.
Tully said while low-cost carriers traditionally targeted point-to-point flying, more Kiwis were using Jetstar for flights across the Tasman that connect to destinations in Asia.
Air New Zealand and Qantas/Jetstar/Emirates have about 92 per market share across the Tasman.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
