Is Air New Zealand crapping on New Zealand?

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#1981701 22-Mar-2018 19:35

There are many penalties for choosing to live in a backwater far away from the bulk of the population and thus economies of scale. This is just one of them.

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allan

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#1981716 22-Mar-2018 20:41

cadman:

There are many penalties for choosing to live in a backwater far away from the bulk of the population and thus economies of scale. This is just one of them.

Yeah I'm not sure that the Kapiti Coast fits that definition...

elpenguino

3359 posts

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#1981720 22-Mar-2018 21:05

ockel:

elpenguino:

All the discussion so far has touched on the financial side of it.

The thing that struck me when I heard the mayors of several smaller towns on the radio was that this issue causes terrible damage to the ANZ 'brand' (urgh).

They are no longer the airline for all of NZ - only the bits they cherry pick.

I bet this kind of thing lets ANZ slide down the trusted brand ladder a few rungs each time.

ooooh - good point. I wonder how much of the CEO's package is based on the change in the trusted brand ladder? Or the level of dividends?

It probably is someone's KPI

I don't know anything about marketing, I've got a real job.

https://en.wikipedia.org/wiki/Brand_equity

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

elpenguino

3359 posts

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#1981723 22-Mar-2018 21:08

allan:

cadman:

There are many penalties for choosing to live in a backwater far away from the bulk of the population and thus economies of scale. This is just one of them.

Yeah I'm not sure that the Kapiti Coast fits that definition...

One of the challenges there was probably the presence of a larger airport 65kms away.

There are still services, just not ANZ.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

hairy1

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#1981732 22-Mar-2018 21:23

This is not a New Zealand problem. It happens all over the world.

This the answer in Australia and the USA:

https://infrastructure.gov.au/aviation/regional/

https://www.transportation.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service

The other extreme was Air Nauru.

https://en.wikipedia.org/wiki/Nauru_Airlines

Disclaimer: I work for Air NZ.

My views (except when I am looking out their windows) are not those of my employer.

Hammerer

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#1981769 22-Mar-2018 23:07

networkn:

If the Government wants more regional coverage by the National Carrier, it's welcome to negotiate terms that are attractive to the business supplying it. I'd suggest either more attractive tax incentives or such...

I expect that the Provincial Growth Fund will be the source of funding to maintain regional airlines as it is already for regional railways:

https://www.radionz.co.nz/news/political/351093/back-on-track-chunk-of-60m-regional-fund-goes-to-rail

I suspect that the politicians will try to avoid this solution, at least in the short term, because it doesn't provide enough regional jobs. But I'd say that an airline network is necessary infrastructure especially if we want to remove barriers and attract larger businesses to provincial locations.

(Edit to correct grammar)

openmedia

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#1981771 22-Mar-2018 23:19

elpenguino:

All the discussion so far has touched on the financial side of it.

The thing that struck me when I heard the mayors of several smaller towns on the radio was that this issue causes terrible damage to the ANZ 'brand' (urgh).

They are no longer the airline for all of NZ - only the bits they cherry pick.

I bet this kind of thing lets ANZ slide down the trusted brand ladder a few rungs each time.

This is a discussion about Air NZ, not ANZ Bank.

Generally known online as OpenMedia, now working for Red Hat APAC as a Technology Evangelist and Portfolio Architect. Still playing with MythTV and digital media on the side.

empacher48

366 posts

Ultimate Geek

#1981778 22-Mar-2018 23:54

Unfortunately most people outside the aviation don’t realise that airline economics work on a cost per seat per kilometre (CASK).

The smaller the aircraft and shorter the distance the aircraft flies, the larger the dollar CASK. So your regional flights will have a larger CASK than a long haul flight.

Simply putting a larger aircraft on the route won’t necessarily lower prices as the distance travelled is the same and larger aircraft do have higher costs. Simply putting a jet flight on a route won’t make it cheaper, in fact the opposite will happen.

To make a profit your Revenue per seat kilometre has to be higher than your CASK. If your costs are higher, then your fares have to be higher. But then you have to judge the yield as if you price your seats at a lower price point you can sell out the flight and not maximise revenue, however sit it too high and you’ll have flights that operate with spare seats which will again not provide revenue. Airline seats are perishable, once the flight leaves the ability to make money from that flight is lost forever.

Because of yield management, tickets bought well in advance are likely to be sold close to, if not less than the cost of the actual seat, however the closer you get to the date of the flight it does become more expensive. (Simple supply and demand, less seats available, the higher the price).

The regions where there is competition between the two airlines are the ones the Aussies can make a quick easy buck to send back across the ditch and pay the Aussie government. The reason some regions got competition is because the Aussies aren’t paying landing fees, terminal usage fees or leases to the councils. Unlike the national carrier who is paying those in full.

*disclaimer, I work in the aviation industry. But not in NZ at the moment.

MikeAqua

7769 posts

Uber Geek

#1981825 23-Mar-2018 08:51

empacher48:

The reason some regions got competition is because the Aussies aren’t paying landing fees, terminal usage fees or leases to the councils. Unlike the national carrier who is paying those in full.

Presumably that disparity will be temporary. Either 'the aussies' will have to start paying or AirNZ will demand the same deal.

At that point will the competition evaporate again?

Mike

networkn

Networkn
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#1981845 23-Mar-2018 09:28

elpenguino:

All the discussion so far has touched on the financial side of it.

The thing that struck me when I heard the mayors of several smaller towns on the radio was that this issue causes terrible damage to the ANZ 'brand' (urgh).

They are no longer the airline for all of NZ - only the bits they cherry pick.

I bet this kind of thing lets ANZ slide down the trusted brand ladder a few rungs each time.

Unfortunately, in NZ, when people run out of actual logical and fact-based arguments they often resort to emotional ones.

I can absolutely understand they are upset, the same way I understand when banks close or ATM's close or post offices close in small communities. However, people often have a romantic view of other peoples money! It's ok for others to lose money so the can continue to partake in an activity, but if you asked them to contribute to keeping it, or lose money for other peoples ability to partake, it's different!

Rikkitic

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#1981858 23-Mar-2018 10:01

I don't think anyone would seriously argue that a commercial enterprise should provide a service that loses money. But is that the case here, or is it just one of we make a little profit or break even on this but we want to make more profit so stuff the community? I still believe that a company that operates in a community derives benefits that may not be quantifiable from that community and this creates a certain responsibility to the community.

Plesse igmore amd axxept applogies in adbance fir anu typos

MikeB4

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#1981862 23-Mar-2018 10:05

Rikkitic:

I don't think anyone would seriously argue that a commercial enterprise should provide a service that loses money. But is that the case here, or is it just one of we make a little profit or break even on this but we want to make more profit so stuff the community? I still believe that a company that operates in a community derives benefits that may not be quantifiable from that community and this creates a certain responsibility to the community.

If those routes were making a profit I am certain the AirNZ management would keep hold of them, there is no logic in handing profit to competitors.

itxtme

2102 posts

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#1981870 23-Mar-2018 10:23

MikeB4 the suggestion on the ground in Kapiti is that it did make money, but they are short of staff for those types of planes, and can use them on routes that are more lucrative like WLG to CHC.

@networkn - where your opinion differs from mine is that you hold no weight on the fact of who owns majority share and the fact they may have an opinion on these moves. Equally you hold no weight on the concept that a national carrier may have some responsibilities larger than just printing money for record profit after record profit.

kryptonjohn

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#1981873 23-Mar-2018 10:25

Laxon claimed they were losing $50/seat out of Kapiti.

elpenguino

3359 posts

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#1981889 23-Mar-2018 10:35

networkn:

elpenguino:

All the discussion so far has touched on the financial side of it.

The thing that struck me when I heard the mayors of several smaller towns on the radio was that this issue causes terrible damage to the ANZ 'brand' (urgh).

They are no longer the airline for all of NZ - only the bits they cherry pick.

I bet this kind of thing lets ANZ slide down the trusted brand ladder a few rungs each time.

Unfortunately, in NZ, when people run out of actual logical and fact-based arguments they often resort to emotional ones.

I can absolutely understand they are upset, the same way I understand when banks close or ATM's close or post offices close in small communities. However, people often have a romantic view of other peoples money! It's ok for others to lose money so the can continue to partake in an activity, but if you asked them to contribute to keeping it, or lose money for other peoples ability to partake, it's different!

if that's a shot at me you'll have to note I didn't comment on the financial merits of pulling the service one way or the other .

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

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