08 September 2013

The Air NZ Provinical Cuts - My Comments

I was out of touch with the outside world when the news came through of Air New Zealand canning its Masterton service and its weekday flights between Wanganui and Wellington leaving Wanganui with no air connection to the South Island.
 
To be honest, when Oamaru went and then Wanaka, I wasn't surprised with the news that Masterton was to be cut. One wonders now what the future holds for a number of other Beech 1900 ports, in particular Kaitaia and Westport but not far behind Timaru and Hokitika. Whanganui MP Chester Borrows was reported as saying that the Wellington-Wanganui flights wouldn't break even if they were 100 per cent full. This is the sad reality about the economics of the Beech 1900 in Air New Zealand service. My own belief is that Eagle Air has really lost the edge in its ability to be independent and being innovative in promoting services to the provinces and one wonders how much longer a 19-seater will be viable in the Air NZ fleet.
 
In a way the small airports can't win. The reality is that Masterton folk could get cheap fares and a better selection of  flights by taking a one hour drive to Wellington or Palmerston North. For Wanganui it is the same - an hours drive to Palmerston North. The same was true at Wanaka - an hours drive to Queenstown. And I know a huge number of people drive from Greymouth and Hokitika to Westport or Christchurch to get cheap fares on whichever airline. How much is convenience of a local service worth? Air New Zealand can't expect people to support a local service if from a price perspective it is comparatively way different for example $300 to fly from Auckland to Masterton compared to $39 fares to Wellington! The national carrier can't expect to see itself as a charity case when it has made $182 million profit on the one hand and laying off 180 engineers and provincial services on the other.
 
I suspect I am like a lot of New Zealanders - my first choice is to fly Air New Zealand (for me because it flies to my home town) but if the fares are high I will use Jetstar. But if Air New Zealand is not going to fly to the provinces why pick Air NZ over Jetstar? The people that drive to the bigger cities have a choice as to what airline to fly. One wonders if the long whispered rumour of Jetstar going to the larger provincial centres will come about?
 
Meanwhile the withdrawal of the Masterton-Auckland service leaves a real opportunity for an Auckland-based operator to do something. There are several reasons for this. My guess is that most passengers flying on the service are flying to Auckland or connecting to an international with no "through-fares." So it is a niche market. So why an Auckland-based operator? The days of the likes of Wairarapa Airlines have long gone. People won't fly an unpressurised Chieftain (or the like) long distance like they once did. Having a Masterton-based aircraft sitting around in Auckland all day doing nothing doesn't make any money. However, if an Auckland operator did an overnight service like Air New Zealand's present timetable the aircraft would then be available for charter or other services during the day.
 
So who might be the contenders? Such a set up would be ideal for Great Barrier Airlines or Fly My Sky if they had a suitable aircraft that they could then usefully use on their core Great Barrier Island service. A Trislander or Islander wouldn't work! Inflite Charters would, in my opinion, be the obvious contender. Their Jetstream 32s don't do much anyway so this might prove a good way to use them while still have them available during the day. Another possibility would be Air Chathams with their Metroliner or Vincent Aviation with a Jetstream 32. It's a niche market so it is not stepping on big brothers toes but it means for both setting up an Auckland operation and then finding other work during the day time.
 
As for the Wanganui-Wellington I suspect this run will be relegated to the history books unless someone with a fourth Caravan might be interested but it would have to be for people wanting to do a Wanganui-Wellington commute. People aren't going to change airline to fly further south. Getting the fares right is the key part to the formula and maybe having through fares to Blenheim and Nelson might get another punter or two.
 
As always, the 3rd level airline scene in New Zealand is always about finding a niche and then finding the right formula.

33 comments:

  1. But the thing with Wanaka and Oamaru was that they had a schedule that worked for them, and the services were well patronized. But then NZ mucked with the schedules, and gave the towns a ridiculous schedule. Patronage dropped, the services ended. Masterton had a schedule that worked. The fat of the matter was fares were far to high. With fares like they were, it was out of reach for the occasional flyer. The grandmother going to Auckland to see her grandchildren, the Mum and Dad heading away for a weekend. Its just to expensive, especially when PMR and WLG are only an hour away. I realise fares on the 1900D will not be fantastic, but MRO was ridiculous.

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  2. Oamaru definitely got screwed... Again, good loadings. I wonder how the loadings compare to others on the NZ network - Kaitaia, Blenheim, Hokitika, Timaru, Westport etc

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  3. Timaru and Wanganui continually have good loadings, but the demand is not there for larger Q300 services (this from a 1900D pilot friend) He said Hokitika is ticking away nicely, as is Westport. He told me Kaitaia is struggling slightly. Kerikeri is soon to recieve more Q300s, and last minute KKE is cheaper than KAT. Will be interesting to see what happens

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  4. But is it the 1900D that is uneconomic? Look at Great Lakes Airlines, they operate over 30 Beechcraft 1900D aircraft. I mean they no doubt have their challenges, but they seem to be doing ok!

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  5. A Jestream 32 could be operated twice daily into Masterton. One arriving 9 from Auckland and departing at 9.30. And a second flight arriving at 5 leaving at 5.30. This would be better as the operating cost of a j32 is significantly less than a 1900, both Masterton and Auckland residents would be able to spend the working day in either city and there would not be the cost of an aircraft overnighting in Masterton

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  6. I reckon a TUO-WAG-CHC service with the same sort of timing as the current WLG flights would be better patronized

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  7. Air Chathams with the Metro would be a good idea. Keeping the sane schedule as NZ he, it would give the Metro all day to do a run out to the Chathams or something. I wouldnt think an AC overnighting at MRO would be too expensive

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  8. Get Vincent Aviation to take over the 1900 services

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  9. The problem with Air NZ is it's either their metal or the highway. They would never dream of letting a 3rd level carrier take over a route and entering into a codeshare deal in NZ. And it's not that the Beech 1900 is necessarily uneconomic for say, Greak Lakes Airlines, but then they operate multiple flights over certain routes whereas Air NZ is doing just one daily flight in the case of OAM/WKA/MRO etc. You CANNOT make a once a day flight with a 1900D work. Pure economics. This service should have been developed, ideally, into a twice daily (minimum) or had a Q300 replace it. One daily Q300 certainly beats 1 daily Beech. This is why the 1900D still works for WAG-AKL and GIS-WLG and so on. In my opinion Air NZ has lost interest in the regions and in Eagle Air and its 1900Ds. I've no doubt places like Wanganui, Timaru and so on will get maybe once or twice daily Q300 or ATR service eventually...way in the future.

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  10. But you can't develope a route into two flights a day, when demand is not there. Just like you can't put a 50 seater AC on a route, and have only 19 people fly on it, that's not economical. I agree WAG and TIU will one day end up with a Q300 service. I remember when Wanaka left the network in January, people kept saying "why doesn't Air Nelson run the route". Simply because demand is not there for 50 seats. NZ will lose money hand over foot. Yes the 1900Ds are expensive to run and maintain. Is it time for NZ to look at other options? Are the J32s cheaper, or the Dornier 228s? Are they pretty much the same? Time will tell what happens

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  11. "But you can't develop a route into two flights a day, when demand is not there." Is the demand not there or the demand is not there with that fare structure. It would have been interesting to know how many people were flying in and out Queenstown who then drove to or from Wanaka. From what I understand a lot of Invercargill people drive to Queenstown as it is far cheaper to fly to Auckland or Wellington from there than Invercargill. I guess part of the problem is that we have too many airports. But I think equally true is that Air NZ isn't successfully tapping the provincial markets as well as they could. The 1900 might not be the right machine - but then there is nothing until the Q300 which is too big

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  12. Exactly, I feel there is a need for an AC between the 1900D and Q300 in size. A J41, Q200, or Embraer Brasilia or Shorts 360 ect. Then they could get rid of a few 1900Ds. I'm sure places like Wanganui and Timaru could step up to a 30 seater Aircraft.

    I agree, but as we know, Air NZ seem scared to take any risks when it comes to the regions, they won't implement a second service, even as a trial. This means places like Masterton have to pay up, or lose it completely. I live in Whakatane, and occasionally drive to TRG, ROT or HLZ for cheaper fares

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  13. I would love see Brasilias in NZ

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  14. Demand sometimes isn't there because of infrequent flights and high fares...and couples with the fact that some people detest the 1900D to fly on. Personally I think it's a delightful machine but no longer suitable.

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  15. Also in the case of regional airports take Ballina Airport in Australia which had a couple of sleepy Saab 340 and Dash 8 flights a day (REX/QF) where nobody thought demand was there either. The service was at risk of being canned until the low-cost revolution following Ansett's demise. Now Jetstar service it with a daily A320 and Virgin with a 737-800 or E190. People appeared from "nowhere" seemingly to take advantage of the low fares the daily jet service afforded them.

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    1. Exactly... the stats say if the numbers are there people will fly... Think about the last 50 years... Air travel is THE way people travel on public transport in NZ now... trains and buses are becoming less and less

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  16. I live in Masterton but most of my travel is to Christchurch. There are many times where I would've very happily paid a premium for a MRO-CHC-MRO service in order to avoid what usually ends up being a 5 hour endurance race. Taxi to Masterton railway station, train to Wellington, often late, bus to WLG, often stuck in traffic, expensive airport food at WLG, then WLG-CHC which is the fastest leg of the route. To avoid all of that and be dropped off at our local airport would've been bliss, and where possible we always flew the 1900D to AKL. I say "when possible" as the fares were often prohibitive, usually $200+ each way which is a big ask. Back when standby fares were an option the 1900D was a very convenient way to get to and from AKL, and we dreamed of the day when we could do the same to CHC! Even a short hop-service from MRO-WLG would be great to avoid all the hassle of the Rimutaka Hill, Wellington traffic, petrol costs, and parking fees at WLG.

    Oh well. I hope someone innovative and determined steps up, I will miss going down to MRO to meet friends and family on the 1900D. I feel sorry for the workers at MRO too, they were always very friendly, and I hope our airport cat finds something else to amuse it in the evenings. It was always fun getting greeted by a cat when you walked into the terminal!

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    1. I hope MRO gets something Michael. I think a MRO-CHC could have been a possibility... but then I thought MRO-AKL would have been a winner! Maybe someone else will get the formula right!

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  17. I am a Air Nelson pilot, flying Q300s all over the country. Air NZ I agree have lost interest in the regions, especially regions with solely Eagle services. There are many routes around the country Air NZ could fly, and potentially make a buck out of it...... With the right Aircraft. In talking with a few other AN Pilots, we reckon a few potential Air NZ routes are HKK-WLG, CHC-TEU, GIS-CHC, and reintroducing HLZ-NSN and 
    CHC-WSZ. PPQ took us by surprise, we didn't think it would be as successful as it has turned out. Originally, it was a route for Eagle and the 1900D. Now we are adding another service to Christchurch. 

    It costs roughly the same to operate a Q300 as it does a 1900D, hence why fares to Eagle Centres are more expensive than AN centres. The 1900D is not a cheap AC to fly or maintain, there are other 19 seater options on the market, options that are cheaper to run than the Beech. 

    It costs the roughly the same to operate a Q300 from say AKL-WAG than it does a Beech. 50 seats over 19. That means more cheap fares, because there are more seats. 

    I agree with above comments, Air NZ need to buy a few 30 seater AC, and then sell a few 1900Ds. Or even change the whole 1900D fleet to something more economical.  

    NZ got their first 1900D in 2001, they are getting on age wise, and there will come a day when a replacement will be needed. 











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    1. I agree HKK-WLG and GIS-CHC would be worth a crack... TEU-CHC would be a long shot. Perhaps start an airline called Mount Cook Airlines and offer CHC-MON-ZQN-TEU services. I suspect CHC-WSZ would be a disaster... it fell over even with Solid Energy guaranteeing a certain number of seats. The new PPQ-CHC service is at the expense of one of the three PPQ-AKL services. Interesting about the Q300 costing about the same to operate as a B1900.

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  18. Hi Steve,

    Thought you might be interested
    www.theflyingsocialnetwork.com/archives/24759
    Nightrider flights now to CHC

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  19. Air NZ cutting fares on Gisborne-Auckland city pair by average of 11 percent sighting "operation efficiencies that have been acheived since the airline upgauged most flights to the Q300".

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  20. Eagle will remain an operator for a while yet, a simulator for the Beech has just been installed at Auckland, and the airline provides a valuable training ground for pilots feeding into the larger Air NZ group aircraft.....

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  21. I find some of the arguments on here to be ridiculous.

    If Air New Zealand can't make AA-MS economically viable, then how on earth do people expect a tin pot, GA with turbines outfit such as Vuncints or Soundsair to be any different?

    People also need to realise that Air New Zealand is a business with shareholders. It is not, as some people would appear to think, a charity.

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    1. FullyintonewzealandSeptember 09, 2013 9:31 PM

      Its not that AA-MS is uneconomically viable, it just is with a 1900D aircraft. With a better fare structure, and cheaper operating AC, the service has potential to be a success

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    2. I think the relationship between Eagle and Air New Zealand has changed. Eagle used to have more independence and control. They also were able to do their own marketing. With the move to centralise a lot of these functions to Air New Zealand Eagle lost the ability to develop and market routes. Air New Zealand head office is going to be more interested in marketing and filling the jets while the provincial runs become forgotten. One can ask, was the Masterton ever really marketed? I remember seeing something that at the beginning Masterton was getting the highest loadings of a Beech 1900 route. What happened to those sort of numbers?

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  22. Arguments??? Discussion is a better word. Every person that has commented seems in agreement that the 1900D is a uneconomical Aircraft. Vincent Aviation operate turboprop Jestream 32 aircraft, not turbine Caravans like Sounds Air.

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    1. So why then did Air New Zealand go with the B1900 in the first place if they are so uneconomical?

      Those Jetstreams are a pile of junk.

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    2. I agree the Jetstreams are bad news. Simply replying that Vincent Aviation operates Turboprop not turbine AC. I am unsure what was on the market at the time. But also it is 19 seater AC in general that are uneconomic

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    3. Yes... I agree the Beech 1900D is FAR superior to the Jetstream... The 1900 has much more passenger appeal. However, when Vincent Aviation got their air ambulance ZK-LFW it was noted on this blog that "1900s are/were never an option as an air ambulance as the running costs are astronomical compared to a J32 or Metro." Also, last time I flew into Hokitika it was on Vincent's ZK-VAH... I thought it seemed a lot superior to the Air National ones

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  23. I agree, more of a open forum/discussion than a argument. Nearly Everyone seems to be on the same page. My views are pretty much the same as most others. Steve Lowe- well done for having a blog like this, it is a real credit to you.

    Cheers,

    Danny

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  24. Eagle will go to 12-14 1900's from 2016. Simulator has arrived and will be installed this month. New avionics going into the 1900 from next year. Company word is 1900's for another 10 years ish.

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