Air New Zealand pull back from the regions

Forums › Off topic › Air New Zealand pull back from the regions

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8

29752 posts

Uber Geek

Trusted

Lifetime subscriber

#1175113 13-Nov-2014 12:14

billbennett:
tdgeek:
MikeAqua: I'm in two minds about this. I can see an argument that if a route is unprofitable it should be dropped. However, overall AirNZ's network is highly profitable. I can also see an argument that if you are operating as a national carrier, you should operate a national network.

If Air NZ was a government owned transport system, then yes, their traffic routes are a service, but they are a company, like any other, and like wage and salary earners. We want a profit, and we make efforts to reduce loss of income activities. If another carrier moves in, great. If Air NZ responded, thats a whole other story, and it would hit the fan.

There's a problem with leaving things to the market.

Air NZ is big enough to wipe out a small competitor - say a regional airline - then once the competitor is eliminated, Air NZ may then halt or drastically cut its services in that region. In effect that's a lose-lose.

Something like this may have already happened. Others will know more about that than me.

I agree, but I doubt the ComCom would allow this to occur. For Air NZ to pull out, they must have exhausted options to make the routes viable, they can't just come back and automagically find it worthwhile to operate there.

tdgeek

29752 posts

Uber Geek

Trusted

Lifetime subscriber

#1175116 13-Nov-2014 12:17

afe66: I thought the government owned 51% of air new Zealand and so has the "power" surely to tell the company they own to do this that and the other.

They appoint more of the board of directors than any other group or all the other shareholders combined.

They wont for political reasons or not wanting to interfere with a business but that's different surely from saying they "cant" interfere.

A.

The Govt doesn't run the company it has shares in it. Yes they can make noises, probably enact something, but that affects their and other shareholders if these forced actions downgrade the earnings. Share price drops, affecting all shareholders. The Govt was all out for Kiwirail, isn't this an option to access a growing market?

MikeAqua

7785 posts

Uber Geek

#1175266 13-Nov-2014 15:37

I would have to admit my rationale is values based. The taxpayer bailed AirNZ out big time to ensure we continued to have a national carrier. I think that places considerable onus on AirNZ to behave like national carrier and provide a reasonably comprehensive and integrated network, serving most of NZ.

Yes it may mean some routes are unprofitable (at the subsidiary company level), but AirNZ is by industry standards highly profitable at the consolidated level so what is the problem?

AirNZ has/had the advantage of having a regional, national and international network of flights. There is an advantage in having the same or allied carriers for a whole trip - especially if one of your flights is delayed or cancelled.

Perhaps AirNZ could partner with small regional airlines to provide a national service? They probably won't because those regional airlines are to a lesser or greater extent competitors.

sbiddle:
MikeAqua: I'm in two minds about this. I can see an argument that if a route is unprofitable it should be dropped. However, overall AirNZ's network is highly profitable. I can also see an argument that if you are operating as a national carrier, you should operate a national network.

What's your definition of a "national network"? Why do you not consider Air NZ to be running one?

What makes a destination such as Kerikeri any different to Wanaka?

Mike

sbiddle

30853 posts

Uber Geek

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#1175294 13-Nov-2014 16:16

MikeAqua: I would have to admit my rationale is values based. The taxpayer bailed AirNZ out big time to ensure we continued to have a national carrier. I think that places considerable onus on AirNZ to behave like national carrier and provide a reasonably comprehensive and integrated network, serving most of NZ.

Yes it may mean some routes are unprofitable (at the subsidiary company level), but AirNZ is by industry standards highly profitable at the consolidated level so what is the problem?

Air NZ had one great year (last year) but if you were to look at the last 10 years as a whole they've delivered an ROI that most people would consider very average. Between (and I'd need to check these to be 100% certain of the figures) 2013 and 2017 they're spending in excess of $2 billion on new aircraft and by 2017 will be looking for options to replace the 77E fleet between roughly between 2020 and 2022 at a cost of probably $1.5 billion.

Running an airline is a very high risk, high strategy game. As a frequent flyer I don't appreciate many of the cutbacks that have occurred and the profit at all costs attitude from the current exec team but I'm grateful Air NZ is not in the same situation as Qantas.

You can look at those profits and current management and think things are going well, but if something like Ebola was to spread (just like Bird flu or SARS) it caused massive damage to the airline industry that took years to recover from.

Geektastic

17943 posts

Uber Geek

Trusted

Lifetime subscriber

#1175329 13-Nov-2014 16:59

The strange thing is that I have flown overseas every year for a number of years and ANZ have never yet got the business because they are always amongst the most expensive.

I do usually use them domestically (where there is little choice really anyway on many routes) but almost never international now.

Handle9

11394 posts

Uber Geek

Trusted

Lifetime subscriber

#1175380 13-Nov-2014 18:41

MikeAqua: I would have to admit my rationale is values based. The taxpayer bailed AirNZ out big time to ensure we continued to have a national carrier. I think that places considerable onus on AirNZ to behave like national carrier and provide a reasonably comprehensive and integrated network, serving most of NZ.

Yes it may mean some routes are unprofitable (at the subsidiary company level), but AirNZ is by industry standards highly profitable at the consolidated level so what is the problem?

AirNZ has/had the advantage of having a regional, national and international network of flights. There is an advantage in having the same or allied carriers for a whole trip - especially if one of your flights is delayed or cancelled.

Perhaps AirNZ could partner with small regional airlines to provide a national service? They probably won't because those regional airlines are to a lesser or greater extent competitors.

sbiddle:
MikeAqua: I'm in two minds about this. I can see an argument that if a route is unprofitable it should be dropped. However, overall AirNZ's network is highly profitable. I can also see an argument that if you are operating as a national carrier, you should operate a national network.

What's your definition of a "national network"? Why do you not consider Air NZ to be running one?

What makes a destination such as Kerikeri any different to Wanaka?

This type of rationale reminds me of an old joke:

What's the fastest way to become a millionaire?
Start as a billionaire and buy an airline...

Honestly airlines are super risky low ROI businesses with huge CAPEX budgets. To expect shareholders to perform a public good at their own expense is somewhat delusional.

sbiddle

30853 posts

Uber Geek

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#1175434 13-Nov-2014 20:25

Geektastic: The strange thing is that I have flown overseas every year for a number of years and ANZ have never yet got the business because they are always amongst the most expensive.

I do usually use them domestically (where there is little choice really anyway on many routes) but almost never international now.

Air NZ pricing isn't cheap - if you look at pricing to London on the Air NZ site you'll typically find it's ~$1000 - $1500 cheaper to fly AKL->virtually any Asian destination->LHR on NZ metal to Asia and then CX/SQ/LH to London than what it is to fly AKL->LHR via LAX on Air NZ

Sharesies

Trade NZ and US shares and funds with Sharesies (affiliate link).

blakamin

4431 posts

Uber Geek
Inactive user

#1175465 13-Nov-2014 21:03

old3eyes:
blakamin: How do they still fly to Paraparaumu then?

My wife has done this AKL to PAR flight and it's always near full when she's been on it....

When I looked at it at easter, it was twice as expensive than welly to akl... so I didn't bother.

Elpie

1304 posts

Uber Geek

#1175473 13-Nov-2014 21:20

Geektastic: The strange thing is that I have flown overseas every year for a number of years and ANZ have never yet got the business because they are always amongst the most expensive.

I do usually use them domestically (where there is little choice really anyway on many routes) but almost never international now.

I look at AirNZ pricing last and would only use them as a last resort even if prices matched. I've had very poor service from AirNZ for a number of years and don't like some of their policies or (lack of) service. Price is a biggie though and there can be a huge saving by not using them. Sometimes, though, there's a huge saving by using them if you look carefully at routes.

Last year I booked for my man to get back to NZ for New Year, for ten days. Booking with AirNZ would have cost $2000 more than booking with AirNZ. That's not a typo. AirNZ Montreal to Palmerston North at peak season was expensive. Flying Star Alliance Montreal to Honolulu and with an AirNZ booking from Honolulu to Palmerston North ended up with ticketing all the way on AirNZ but $2,000 cheaper. This is because going via Honolulu hooked us in to a route on which they are price-cutting like crazy to undercut regional airlines.

Looking at routes instead of just accepting whatever their online booking system throws up can save money.

Geektastic

17943 posts

Uber Geek

Trusted

Lifetime subscriber

#1175526 13-Nov-2014 23:22

Elpie:
Geektastic: The strange thing is that I have flown overseas every year for a number of years and ANZ have never yet got the business because they are always amongst the most expensive.

I do usually use them domestically (where there is little choice really anyway on many routes) but almost never international now.

I look at AirNZ pricing last and would only use them as a last resort even if prices matched. I've had very poor service from AirNZ for a number of years and don't like some of their policies or (lack of) service. Price is a biggie though and there can be a huge saving by not using them. Sometimes, though, there's a huge saving by using them if you look carefully at routes.

Last year I booked for my man to get back to NZ for New Year, for ten days. Booking with AirNZ would have cost $2000 more than booking with AirNZ. That's not a typo. AirNZ Montreal to Palmerston North at peak season was expensive. Flying Star Alliance Montreal to Honolulu and with an AirNZ booking from Honolulu to Palmerston North ended up with ticketing all the way on AirNZ but $2,000 cheaper. This is because going via Honolulu hooked us in to a route on which they are price-cutting like crazy to undercut regional airlines.

Looking at routes instead of just accepting whatever their online booking system throws up can save money.

I agree about the service - last time I used them internationally the service was perfunctory and cabin attention rare.

Flew Emirates this year and although the 777 cabin was awfully cramped and the seat amongst the least comfortable I have sat on in 46 years, the service was good. The A380 sectors were a pleasure in contrast to the 777 sectors - so I have now instigated a rule not to fly on 777 any more. From a passenger's point of view it is dreadful.

Air NZ even cheat - Premium Economy on the 777 has exactly the same seat width as the standard economy. Additionally some dolt placed the headphone sockets on the inside of the armrests, so the stupid 2 prong plug that airline use is jammed into the side of your thigh for the whole flight...!

sbiddle

30853 posts

Uber Geek

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#1175558 14-Nov-2014 07:46

Geektastic:
Air NZ even cheat - Premium Economy on the 777 has exactly the same seat width as the standard economy. Additionally some dolt placed the headphone sockets on the inside of the armrests, so the stupid 2 prong plug that airline use is jammed into the side of your thigh for the whole flight...!

PE on the 77E is the same seat with greater pitch and recline. On the 77W it's the space seat which is entirely different from the regular economy seats. On the 77R (77E refit) it's also a very different seat.

Economy on a Air NZ 77E is 3-3-3 actually an OK experience, unlike the 77W and now the 77R which have moved to 3-4-3 configuration and used narrower seats. Emirates are also 3-4-3 across their entire 777 fleet.

billbennett

66 posts

Master Geek

Trusted

#1175560 14-Nov-2014 07:51

Honestly airlines are super risky low ROI businesses with huge CAPEX budgets. To expect shareholders to perform a public good at their own expense is somewhat delusional.

But the government expects telcos to do that with the Telecommunications Development Levy.

Bill Bennett www.billbennett.co.nz @billbennettnz

Geektastic

17943 posts

Uber Geek

Trusted

Lifetime subscriber

#1175588 14-Nov-2014 08:37

sbiddle:
Geektastic:
Air NZ even cheat - Premium Economy on the 777 has exactly the same seat width as the standard economy. Additionally some dolt placed the headphone sockets on the inside of the armrests, so the stupid 2 prong plug that airline use is jammed into the side of your thigh for the whole flight...!

PE on the 77E is the same seat with greater pitch and recline. On the 77W it's the space seat which is entirely different from the regular economy seats. On the 77R (77E refit) it's also a very different seat.

Economy on a Air NZ 77E is 3-3-3 actually an OK experience, unlike the 77W and now the 77R which have moved to 3-4-3 configuration and used narrower seats. Emirates are also 3-4-3 across their entire 777 fleet.

However unless things have changed, the space seats are only on the US routes?

sbiddle

30853 posts

Uber Geek

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#1175602 14-Nov-2014 08:51

Geektastic:
sbiddle:
Geektastic:
Air NZ even cheat - Premium Economy on the 777 has exactly the same seat width as the standard economy. Additionally some dolt placed the headphone sockets on the inside of the armrests, so the stupid 2 prong plug that airline use is jammed into the side of your thigh for the whole flight...!

PE on the 77E is the same seat with greater pitch and recline. On the 77W it's the space seat which is entirely different from the regular economy seats. On the 77R (77E refit) it's also a very different seat.

Economy on a Air NZ 77E is 3-3-3 actually an OK experience, unlike the 77W and now the 77R which have moved to 3-4-3 configuration and used narrower seats. Emirates are also 3-4-3 across their entire 777 fleet.

However unless things have changed, the space seats are only on the US routes?

Yes, 77W only flies to SFO/LAX and LHR as well as some Trans Tasman services. The Space Seat wasn't economical on the refit due to the space it takes which is why they opted for an off the shelf seat.

old3eyes

9120 posts

Uber Geek

Subscriber

#1175637 14-Nov-2014 09:12

blakamin:
old3eyes:
blakamin: How do they still fly to Paraparaumu then?

My wife has done this AKL to PAR flight and it's always near full when she's been on it....

When I looked at it at easter, it was twice as expensive than welly to akl... so I didn't bother.

Depends if you want to waste time traveling to and from Wellington as a part of your day..

Regards,

Old3eyes

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8