Jetstar boosts Bay economy

The arrival of Jetstar flights almost a year ago has boosted the local economy. Photo Warren Buckland

Jetstar's arrival in Hawke's Bay could boost the economy by $8 million, according to Infometrics research.

The gross domestic product (GDP) growth could support up to 132 new jobs, according to the research, which notes domestic air travel prices have fallen by close to 10 per cent during the past 12 months.

Jetstar Group chief executive Jayne Hrdlicka said the report highlighted how important cheap fares were to growing local economies.

"It's estimated that for every $1 spent on aviation, a further $10 is spent in the local economy," she said.

"As this report shows, the benefits of lower fares don't stop at the consumer. Competition and choice in airline travel is also a strong driver of growth for the wider economy in the markets that we serve."

Last December Jetstar began flying between Auckland and Napier and Nelson. Flights from Auckland to New Plymouth and Palmerston North, and between Nelson and Wellington, started in February this year.

The regional expansion could boost GDP by up to $40 million for the regions in the first year of operation.

In the 12 months to June this year,passenger numbers through Hawke's Bay Airport rose 18.9 per cent from the same period a year earlier to reach a total of 566,431.

The reports states that the entry of Jetstar - as well as Air New Zealand pre-empting this competition by lifting capacity and bringing in the larger ATR aircraft - was behind this.

Sounds Air also began flying six times return per week to Blenheim from last November.

The report estimates that an additional 49,215 people will have arrived at the airport across all airlines over the 12 months to November 30 compared with a year earlier,

Of these, 27,236 were estimated to be visitors who would spend about $10.1m on goods and services during their visit to Hawke's Bay.

Infometrics project that a $10.1m increase in turnover from the visitors' spend translates into a $8m lift in GDP for Hawke's Bay.

Jetstar operates up to 244 flights a week on its regional network using surplus 50-seat Q300 Qantas Link aircraft.

Hrdlicka said the regional services had added 600,000 new seats a year.

While there were more aircraft available, she said Jetstar had no plans to expand its regional operation now.

Last year Jetstar announced its domestic jet operation - which it set up in 2009 - was in profit in New Zealand. Hrdlicka would not comment on the profitability of the regional services but said it was ahead of its business plan.

The report noted that Statistics New Zealand found the price of domestic air travel fell by 9.8 per cent between December last year and September this year.In comparison, prices more generally across the New Zealand economy, as measured by the Consumer Price Index, rose 0.8 per cent during the same period.

Jetstar is owned by Qantas and operates here, Australia, Singapore, Vietnam and Japan and of 34 million passengers carried, 20 million paid less than $100 to travel last year, Hrdlicka said.

Tourism Industry Aotearoa chief executive Chris Roberts said the increase in regional airline capacity and lower fares over the past year had helped to boost domestic tourism.

"Domestic tourism is worth $20.2 billion annually to New Zealand - more than international tourism. As the research shows, persuading more New Zealanders to use their discretionary dollars on a domestic travel experience results in more successful businesses," he said.