Loss-making Virgin Australia is axing its Christchurch to Sydney flights and cutting back on flying out of Auckland.
The airline has struggled over the last six years and new chief executive Paul Scurrah today announced a number of cuts, including a long-haul flight between Melbourne and Hong Kong in addition to its transtasman reductions and domestic Australian reductions.
After reporting a $377 million annual loss in August it said it would cut 750 jobs, merge business divisions as part of a sweeping review of its operations.
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It had already trimmed its Christchurch flights to a summer seasonal service four times a week but today scrapped the service and said it will reduce its Auckland-Sydney service from 19 to 14 services a week.
Its Boeing 737s face strong competition from Air New Zealand and Qantas which often fly larger, widebody planes that are popular with passengers and allow them to price tickets aggressively.
The loss of capacity will be a blow to bargain-hunting travellers as fares go up when competition is reduced. Virgin Australia has about 15 per cent of the transtasman market and has been crucial to keeping a lid on prices.
Starting as Pacific Blue with modest flying out of Christchurch, the airline has been here for 16 years. Its transtasman operation accounts for only 5 per cent of its capacity so has been vulnerable to cuts.
Staff on the affected services would be redeployed and while the airline was reviewing current crewing requirements it did not expect there to be any redundancies as a result of network and fleet changes.
Virgin Australia had put more capacity and better service on to the Tasman following an alliance bust-up with Air New Zealand last October but has since found the going tough. Across the group during the past six years, Virgin Australia has piled up more than $1.2 billion in losses.
Christchurch Airport says it remains the second most connected New Zealand city (after Auckland) to Australia, with more than 185 flights a week, and passengers to Sydney were well-served by three airlines.
Along with the daily Emirates A380 and Qantas services, Air NZ has increased its services to Sydney by seven percent. Virgin still flies between Christchurch and Melbourne and Brisbane.
Virgin Australia said today the airline would also reduce capacity by 2 per cent in the Australian domestic market where it is in a tough fight with Qantas.
It will also cut five aircraft from its fleet.
"Some of today's changes respond to shifting demand on some routes, and others are about refocusing Virgin Australia and Tigerair Australia on the destinations we feel they are best suited," said Scurrah.
Demand for Hong Kong from Melbourne has declined following pro-democracy protests this year and the airline said it was satisfied it could be served through its daily service to the city from Sydney.
The Airbus A330 currently operating the Melbourne-Hong Kong services would be redeployed onto daily Brisbane-Haneda (Japan) flights starting next March. Virgin Australia will also re-enter the Melbourne-Denpasar route from March 29, 2020.
Scurrah said Tigerair Australia would increase its focus on the domestic leisure market and as part of a transition to an all Boeing 737 fleet it would reduce its fleet by two aircraft with the removal of two Airbus A320 aircraft by mid-2020.
Following a review of Virgin Australia's regional airline fleet strategy, three of its Fokker 100 (F100) aircraft will also be retired from the fleet by March next year.
Virgin is not the only Australian-based airline finding the going tough in this country. Jetstar will quit flying on regional routes next month, citing high operating costs and disappointing demand as reasons for the decision.