Regional Air Services - What future?

A few days ago the MRC Aviation blog reported that Air New Zealand Link/Eagle Air Beech 1900D ZK-EAL UE-435 has been withdrawn from the regional carrier's service pending sale as the Hamilton based airline scales back its operation. (see http://www.mrcaviation.blogspot.co.nz/2014/06/beech-1900d-zk-eal.html)

For sale...  Beech 1900 ZK-EAL... It is seen here at Wellington on 16 November 2007

In recent years we have seen Eagle Air withdraw from all the ports that received a single daily service, namely Oamaru, Wanaka and Masterton. For sometime now the rumour mill has been saying that it is really hard to make a profit or even break even with Beech 1900s. People in the smaller centres expect the same cheap fares available on the Boeing/Airbus flights out of the main centres. The main centres, it seems to me, are Eagle's biggest competitor. Why pay a fare in the hundreds of dollars when a drive to a major airport, sometimes only an hour away, might secure you a fare way less than a $100? If people are after a return fare big savings could be had. This is why I think the Wanaka and Masterton services didn't make it. Cheap fares from Queenstown, Wellington or Palmerston North were only an hour away!

One wonders what future ports like Kaitaia, Whakatane, Taupo, Wanganui, Westport, Hokitika and Timaru have. Kaitaia, Whakatane, Taupo and Wanganui all have relatively major airports within an hours drive. On the West Coast people from Greymouth already drive to Westport or Christchurch to catch a direct flight to Wellington rather a two-fare flight through Christchurch to Wellington. Likewise Timaru folk have no qualms in driving to Christchurch to get cheap fares. As Eagle's Beech fleet reduces will there be cuts to these centres or will they see Q300s flights albeit with reduced frequency?

Kaitaia airport terminal... will it sustain an Air New Zealand service in the long-term

This week Mainland Air has started an Oamaru to Christchurch service and Sounds Air picked up the Wellington to Wanganui route in January. These are gutsy moves by both airlines. It seems to me they need to do two things to make these services work and they both involve people thinking differently. 

First both airlines need to get people to think of flying rather than driving. Wanganui people, I am guessing, think only of driving to Wellington for a day's business. The same is true for Mainland Air's service into Christchurch. Sounds Air's fare is really excellent and I think they need some major marketing and door knocking in Wanganui promoting the service in connection with the Airport bus - No more hassle with rush hour traffic into Wellington! A quick and easy flight and getting into the city in the bus all in just over an hour! Sounds Air might, however, want to think about a little later departure out of Wanganui than 6.45am! The same principle is true with Mainland Air's service from Oamaru into Christchurch, however, their fare is almost double Sounds Air's! 

Secondly, the two airlines have to make it easy for people to trans-ship to Air New Zealand and Jetstar AND to think trans-shipping is easy and makes sense. On the first point this is particularly so for Sounds Air passengers at Wellington. If an elderly passenger wants to fly from Wanganui to Christchurch, when they arrive at Wellington they have to drag their bag up the long ramp to the check-in for Air New Zealand or Jetstar. In the same way when they get back to Wellington they have to drag their bag up from the ground floor baggage claim to the main terminal then down to the Sounds Air check in. This doesn't make it attractive for elderly people to use the Sounds Air service. 

Both the new air services will need to pick up people wanting to travel from Oamaru beyond Christchurch and from Wanganui beyond Wellington. Both airlines need to really sell the advantage of why people should fly with them to connect with another airline at another airport rather than take the car. For example, something like - At Sounds Air we make it easier for you connecting to other flights at Wellington... no driving, no parking fees! 

The other thing the two airlines need to advertise is the cost of getting from A to B... For example - It costs $ 164 to fly from Wanganui to Christchurch if you can pick up a $39 fare from Wellington! Now that doesn't seem too bad a deal to me! Again, its all about changing the mindset of people in New Zealand to change airlines half way through a journey and seeing the overall cost is not bad. That said, in my opinion I think Mainland Air would be better flying to Wellington than Christchurch. My gut feeling is that is where people want to go to but doing that with cheap enough seats is the challenge.

My prediction is that more Air NZ routes will go or frequencies will be reduced in favour of larger aircraft. Both these moves will open the way to airlines like Mainland and Sounds Air to fill the gaps. But it is going to take creativity. There is opportunity for the airlines that can be creative in offering reasonable fares and direct flights without taking on the national carrier. At the moment that opportunity is there between Masterton and Auckland its just a matter of who will get the formula right!