What's next for Jetstar - the airline that changed flying around NZ

Jetstar has carried 19 million people around New Zealand during the past 10 years. The no-frills airline has brought a low fares and completely new competitive dynamic to the market. After a few customer service bumps along the way is firmly a part of the aviation landscape. In 2015 it took a leap from the usual path of low cost carriers and branched beyond its main trunk network on to a number of regional routes. The 125-plane airline is a big low cost player with operations throughout Australasia and Asia. Its boss, Gareth Evans tells Grant Bradley what's next for the airline here.

When Jetstar launched its domestic operations in New Zealand on June 10, 2009, it didn't run according to script.

The airline made a splash with 6000 seats on sale for $0 but a loading equipment glitch in Wellington resulted in delays snowballing beyond two hours throughout its fledgling network, leaving dignitaries at a Christchurch reception waiting and some passengers grumpy.

There have been some further slip-ups along the way but according to disclosed data the airline beat its much bigger rival Air New Zealand for on time performance for the first three months of this year and says it has in place measures to improve customer satisfaction further.

The airline says 75 per cent of its passengers pay less than $100 for seat on its jet fleet on the main trunk and its small regional operation. And while it has only about 20 per cent of the domestic market, its impact on keeping fares down has been powerful.

Stats NZ price indexes show domestic airfares rose about 13 per cent since 2008 while consumer price index inflation rose 20 per cent in total over the period.

House of Travel commercial director Brent Thomas spells out the impact of Jetstar on domestic travel plainly: ''They have changed the landscape. You can fly to Wellington and Christchurch for less than it costs to park your car at the airport. Ten years ago this wasn't the case.''

Even the opposition's complimentary.

Air New Zealand chief financial officer Jeff McDowall says Jetstar is a smart, competitive business. ''It keeps both of us sharp having two airlines operating here.''

Jetstar replaced Qantas on New Zealand domestic routes and instead of the full service operation there was cheap and cheerful - staff, including bosses, doing star jumps during promotion events and a long and sometimes painful lesson for passengers on how the low cost model works.

While the basic fare is low, you pay for everything on top and you must turn up 30 minutes before your flight.

Gareth Evans has been running Jetstar for the last 18 months, a group which has operations throughout Australia, the Tasman, Vietnam, Japan and Singapore.

The group's pre-tax earnings of A$461m ($487m) last year outstripped the part of the business he used to run, Qantas International, by $61m.

The performance of Jetstar in New Zealand isn't broken out in its financial reporting. In 2015 it announced it was in profitable here for the first time although the airline been silent since on that as it absorbs the impact of starting its five-plane domestic operations.

Highs and lows

Evans says he's proud of what the airline has achieved.

''Aviation changes peoples lives and low fare airlines can do that more than anything else.''

The airline is about a tenth the size of Air New Zealand and network problems can quickly escalate. Jetstar has suffered from bad publicity over cancelled flights due to staff illness or problems with its relatively small fleet of aircraft.

''When you run an airline the operation is at the heart of everything that you do and we didn't cover ourselves in glory when we started - but to have an airline now that is leading (on OTP).''

The airline flies to Napier, New Plymouth, Palmerston North and Nelson but has cut back frequency on some of these ''thin'' routes over winter. It started with a hiss and roar in the regions in 2015, making noises about further expansion but there's no sign of this now.

''We've got to make sure we optimise our performance - we've got a big competitor on those routes,'' says Evans.

He's also encouraging customers to give Jetstar a go. As his boss Alan Joyce said a year ago, many Kiwis applaud Jetstar for sharpening competition on the way to getting on board an Air New Zealand plane.

""While we're very pleased to be in those markets we want to make sure we get the support of the communities we serve because at the end of the day we do need to make a return to make a profit as a business on the assets we deploy,'' said Evans.

Air New Zealand earlier this year reported a significant falloff in domestic demand and Evans says the last six months have been soft.

''There's no doubt there's been a bit of slowing of demand in the domestic market in New Zealand. For Jetstar it's 5 per cent to 10 per cent of the Jetstar Group so relatively we're less impacted than Air New Zealand.''

Keeping it simple

When Evans moved into the Jetstar role he encountered a thick rule book that could be bewildering for passengers.

'We are unbundled and that gives customers choice. When they buy the product it is going to be more complex than a premium airline.''

More than 100 commercial policies had been whittled down to about 20.

He said the company mantra was to be as simple, fair and transparent as possible for customers.

It was investing heavily on customer facing technology — its website, app and airport equipment. Passengers get text alerts in advance of their flights and at airports.

Across the group, on average, passengers travelled just once every 15 months.

''They're not necessarily frequent fliers so you have to make the process as easy as possible right from when people are thinking of where to go.''

When Evans started, one of his first jobs was to appoint a chief customer officer.

''We do monitor complaints and we try to learn from them and try to work out what we can do better.''

Operational reliability had been strong for a long time, cabin crew had more customer training and the jet fleet had been refurbished with new seats and more overhead luggage space.

Besides strict check-in time enforcement the airline also brought in dual door boarding and unboarding.

House of Travel's Thomas says passengers have got used to budget airlines and the need to meet their requirements.

''I don't think we knew what a low cost carrier was until Jetstar got here.

But among the 550 staff here there is some unhappiness. While there's no shortage of applicants for jobs, cabin crew are paid an hourly rate rather than a salary (as at Air New Zealand) and this leads to grief when planes don't fly.

E tū union is concerned about the use of contract ground handler Swissport following a safety scare involving a clip board left on an engine with the company it took over.

The union also cites difficulties dealing with Australia-based managers not familiar with the New Zealand labour environment.

But Jetstar says ground handling firms are fully audited, it has no concerns about health and safety and it now had a strong management base in this country.

''Safety is our number one priority.''

Pilots say the relationship with Jetstar is improving after the Australian-based and registered company struggled with New Zealand labour laws in the early days. The airline pays the same rate as others in the industry for the equivalent aircraft types.

''They employ 130 of our members which is a good thing for the industry and a good thing for pilots,'' said NZ Air Line Pilots Association president Tim Robinson.

''They are very much part of the New Zealand fabric and they are here to stay.''

The airline has also collaborated with Massey University on a pilot training programme.

Using the levers

Low cost carriers keep costs down by having uniform fleets, labour flexibility, cabins stripped of luxuries other full service airlines offer and by charging for extras and making up a big part of the $92 billion in ancillary revenue a year that the industry rakes in.

They're especially wary of airport charging.

The relationship between airports and airlines is always going to have tension in it, says Evans.

He has met airport bosses around New Zealand and says he was pleased by Auckland Airport's decision to back down on some charges earlier this year.

''For us as a low cost carrier we want to see there's infrastructure that is the right size for our operation. We don't necessarily need all the bells and whistles that others need, lounges and the like. We want to make sure there is an option that is the right fit our operation.''

This allows low cost carriers to use price as a weapon to stimulate demand or fight the competition.

In February when Air New Zealand slashed fares on 750,000 seats a year for less than $50 each Jetstar announced it would cut prices to just $25 a seat on 75,000 seats.

''The biggest lever we can pull there is price,'' says Evans.

While there's fierce competition with Air New Zealand, which was especially unhappy about Jetstar's push into the regions, the Kiwi carrier has become closer to the Qantas group, signing a domestic code share deal last year.

This mainly affects New Zealanders flying into Australia and then flying domestically - they are channelled to use Qantas flights instead of Virgin Australia services.

Jetstar loves to play the upstart. Later this year it launches services to Seoul in South Korea from the Gold Coast around the same time as Air New Zealand does from Auckland.

Evans says he hopes Kiwis might be tempted to do the dog-leg through Coolangatta.

Jetstar is upgrading its fleet with the introduction of A321NEO from July next year. The current overall order is for 99 with an initial call of 18.

While they are mainly for domestic Australia, some will be used on transtasman routes.

There will be a few tweaks to interiors to add some more comfort and amenities but he jokes about keeping expectations in check.

''We are a low cost carrier so don't expect to see swimming pools and bowling alleys and the like on board.''