17 February 2015

Some Thoughts on the New Air Services - Part 1

The three replacement air services following the Air New Zealand withdrawal from Kaitaia, Whakatane and Westport have been announced. There has been a lot of comment written about them on this blog and as I’ve read the comments I have thought some really good points were made. So this is my commentary on what I think of the new services.

But first of all… how good is current the Air New Zealand service to the three centres?

Air New Zealand’s service to Whakatane to Auckland was excellent with four weekday flights to the City of Sails each day… However, if someone wanted to fly to Wellington or vice versa they had to fly via Auckland which meant a 40 minute flight on top of the flight between Wellington and Auckland with transit time in Auckland. So the question becomes whether passengers choose to fly out of Whakatane or drive the one hour to Rotorua and get a cheaper direct flight.

Westport and Kaitaia have up to two twice daily weekday flights to Wellington and Auckland respectively. Unlike most other provincial services the aircraft did not overnight at either Kaitaia or Westport. This meant the flights leave for Westport after the arrival in Wellington of the first flight from Auckland and a number of other provincial cities so it is good for people heading to Westport. However, the northbound service leaves Westport too late for Buller business people to do a full day in the capital or other centres. The reverse is also true in the afternoons, the service is ideal for business people from outside of the region but not so good for the Buller business people returning home. This same pattern is operated for flights to and from Kaitaia, with flights suiting people heading for Kaitaia for the day but not so convenient for Kaitaia people heading to Auckland, Wellington and Christchurch for a day’s business.

So what of the new services?

Kaitaia – Great Barrier Airlines has been chosen as the new air service provider to Kaitaia. Great Barrier Airlines is no stranger to Kaitaia. In 1985 they introduced an Auckland-Kaitaia service (see http://3rdlevelnz.blogspot.co.nz/2012/01/barrier-connection-great-barrier.html) and they have for some years been operating a Whangarei-Kaitaia service for the District Health Board. GBA are going to operate a Cessna Grand Caravan on the route with 3 flights each weekday and 2 flights each way on the weekend. A Grand Caravan, in my opinion, is a good fit for the Kaitaia service. Sounds Air have proved them a stable and solid workhorse for their Cook Strait services. Being a single pilot and single engine operation will help the economics of the service and GBA have announced that they will offer a flat fare of $180 picking up the Sounds Air model of a flat reasonable fare. GBA will also be able to use the Caravan on its Great Barrier Island services which will keep its usage up and one imagines the Piper Cheiftains would also be a good substitute on the Kaitaia run if needed and certainly until the second Caravan arrives. BUT, the biggest problem I see with the GBA service is the timetable. GBA intend to base the Caravan at Auckland and that means a 6.00am flight from Auckland to Kaitaia. So, no morning connections from any centre south of Wellington and who wants to arrive in Kaitaia about 7.00am for a 9.00am meeting? I think GBA need to rethink their schedule and have the aircraft overnight at Kaitaia. It could then do a 6.30-7.00am departure to Auckland and then return to Kaitaia after the arrival of the first Air NZ/Jetstar flights from Wellington and Christchurch. Then a flight back to Auckland could leave Kaitaia about 9.30-10.00am. This would give the advantage of connecting to the cheaper post-rush hour flights to all destinations south of Auckland on either Jetstar or Air New Zealand. It could also mean the Caravan was available for maintenance or Great Barrier Island flights during the day. In the afternoon the reverse would be flown. I also wonder about the viability of a late Saturday afternoon service and early morning Sunday service unless GBA promote trips to Cape Reinga.

Whakatane – Air Chathams has been chosen as the Whakatane air service provider. Whakatane is the big loser in terms of Air New Zealand’s withdrawal. It currently has four weekday flights a day. While not providing the same frequency as Air NZ the Air Chathams proposal sees an aircraft based at Whakatane and it offers weekday flights departing Whakatane at 7.15am and 4.45pm with return flights departing Auckland at 8.45am and 6.15pm. Two return services will operate on Saturdays and Sundays. Air Chathams will use either a 50-seat Convair 580 or 18-seat Metroliner on the service. Thrifty fares are offered at $89 one-way, saver fares at $149 and economy at $339. There are two questions I have about the proposal. The first is the size of the aircraft… Is the Convair too big? I know it can be substituted with a Metroliner but I wonder if it is time for Air Chats to look at getting a Saab 340 or a Embraer Brasilia. The other comment that I would make is the economy fare IS way too big! That won’t attract the numbers and in the end empty seats don’t pay! Nonetheless I think Air Chathams will be a good fit for Whakatane and I am sure Craig and team will make it work as they have already done on the Chathams service and in Tonga.

Westport – Sounds Air has provided an innovative solution to Westport’s need for a new air service with its purchase of a Pilatus PC-12. Sounds Air will operate 12 return weekday flights to Wellington plus a return service on Sundays. The PC-12, which will be based at Westport, is a high performance single-engine aircraft, single-pilot aircraft.  It has seating for 9 passengers and keeping with the Sounds Air formula there is a set reasonably priced air fare of $199 each way. There are a couple of questions I have about the PC-12 option that have been raised in a couple comments on earlier posts. The PC12 is going to be on the ground at Westport (Tuesday-Thursday) and weekends. As the first comment said, “To get a return on the capital cost the machine is going to have to do a lot more work than that! Not a lot of charter work at Westport!” Another commenter wrote “The problem with the PC12 and Westport is, Westport is not so much of a residential town like Blenheim. When the mines are running well, it’s far more of a mining town as in people are only there to work in the mines. Trouble is, it is international practice for these big outfits like Bathurst, Solid Energy etc not to have employees travel on single engine, single pilot aircraft. So what they're doing with this choice of plane is effectively striking off a good 60%+ of their potential customers flying in and out of Westport.” The first of these comments is certainly true and I suspect the second holds a certain amount of truth. Nonetheless I think Sounds Air have developed a good formula and they are shrewd operators so I think such factors will have been taken into account.

To be continued...


  1. With that last comment on sounds air, I'm not sure about the truth in numbers but it certainly is policy in a number of large scale organisations not to have staff travel on piston and single engine, single pilot aircraft. It's very common practice, but you would think Sounds air know what they're doing. I remember hearing second hand that some people from solid energy maybe were restricted from using the Coast air service in the Cessna Titan because it was a piston aircraft. I don't know about solid energy but certainly Bathurst being an Australian company (where these type of policy are popular) I would doubt you would see much of them on the PC12. It is a good point thought, when Stockton is humming, and lord knows if it will ever be again, Westport is a mining town. Sure the PC12 will be great for the born and bred locals going on their once in a life time holiday out of town,- but I would doubt there would be many of those people compared to the business travellers many of whom I'm sure are to do with the mines, Holcim etc. Actually thinking about it, every time I go to Westport airport, the car park is predominantly full of Solid Energy vehicles.

    Regarding GBA, the news of them getting some caravans is fantastic. Perfect machine for the upper north island and I think with the new ownership taking on this no bullshit policy can only be a great thing. Look at the success of the caravan on the straight. Hopefully it won't be long before the days of GA flying junk heaps around will be over. I'm sure any scheduling issues would be ironed out, it's in GBA's best interest to make it work for the people. I wonder if basing crews and an plane in Kaitaia would be of help ? But good on the new owners for trying to lift GBA's game. I can see a bright future for them,- its just a shame the company / name has a not so bright past.

    Air Chats. Well, a dozen or so people on a 26 tonne gas guzzling relic,- I'm not sure how that makes money,- and that's what this game is ultimately about...

  2. The problem with much of the comment and analysis presented so far is that it is written from the perspective of the keen aviation person - "will the aircraft do the job"? But what determines which scheduled services will survive and which will not is the customer's perspective - will they in fact fly on the service? There are constraints on who will be available to fly - it is correct for example that Solid Energy requires (or at least required) its personnel to fly on Air NZ. Single engine aircraft were not permitted. It is far from the only company (Crown, SOE, or private enterprise) with those policies. Next, around 10% of the public won't fly at all, another 10% are very reluctant flyers and will always use what they see as the safest option, and a percentage beyond that won't fly small aircraft by local operators. with one engine, one pilot, no hostess, no toilet etc. Add to that the question of where they are going - in the case of any of the three airports discussed here, a quarter to a third of passengers will be flying beyond Auckland or Wellington, or arriving from a first departure airport which is not Auckland or Wellington. In general, they will either select, or be sold into the Air NZ solution - e.g. from Christchurch they will be sold a ticket to Kerikeri then drive. Air NZ will try hard to keep the Far North traffic by promoting Kerikeri; the Whakatane traffic by promoting Tauranga and Rotorua with frequent Q300 services and cheap fares. Of the operators you discuss, the one with the longest experience of this is Air Chathams, which took on Air NZ on the Chatham routes and won. But not until they had the Metro and then the Convair did they pull ahead. In addition, you miss the significance of freight - Air Chathams can fly several tons of freight in the Convair as well as 20 or so passengers and its a reasonable guess that freight is part of their plan for Whakatane. They have a well developed base at Auckland Airport, considerable freight experience, a number of aircraft. See www.aircharternz.co.nz for this side of their business. They have considerable experience on fare structures, having gone head to head against both Mt Cook and Airwork in the past on the Chathams run. They know people will pay the "last minute must go" price (as does Air NZ) - their two lower levels of fare are highly competitive with Air NZ for Whakatane. Of the three they are the most likely to succeed.

  3. Interesting not one seat has so far been sold for 28th April first day of WLG-WSZ

    Not one booking for the first 13 days of WSZ-WLG sector.

    It seems the locals haven't gotten behind it with the exception of their rates?

  4. Only two people booked on each WLG-WAG flight for the next week or so.

    Such a shame the public are all talk wa wa then never support the little guy.
    They did the same to Origin in Wanganaui

    1. Origin loads ex Wanganui for Nelson were quite good by my memory.

  5. hey its still a good two months away. im no business man but I could imagine that business people must have some sort of contact or something with air nz till then and have no need to tie things up with sounds air till then.. Also you gotta remember too that sounds air dont have a book early for cheap flights policy. so gives people that last minute option

  6. Is there any latest news you have Steve regarding the other services that will be cut..? Palmy to Nelson, Whangarei to Wellington, Ham to Auck and Taupo to Wellington...? Also a run down on the airlines the likes of sun air and Inflite, that have so far not picked up a route and a prospect into a future roll... Competition etc. Also Masterton... Somewhat been all forgotten since Vincent went under just before Eagle airs announcement. Any word or speculation on what will happen there...?
    South Island..
    Omaru has been tried many times in the future, is there anyway to make that destination work... and along with other former Air NZ points in the past.. Wanaka, Te Anau and Mount Cook.. Could some of these 3rd level airlines give them a go, try make them work or at the very least.. try seasonal flights with the aim to try build them up..?? A possible re-positioning flight option for the PC12 instead of idling on the ground at Westport.... It could do a prospecting Mount Cook-Te Anau-Wanaka-CHC return...? See what business is out there on these routes...

    1. If there is money to be made someone will do it! The reason they are not doing so is because there is no money in it with the type of aircraft that are needed for those sectors.

      A lot of those routes you have mentioned have proven that they cannot support a commercial operation with 19 seat TP's or larger aircraft. Wanaka, Mount Cook and Manapouri are classic cases.

      Te Anau and Wanaka are not "destinations" like Dunedin or Queenstown for tourists. For locals it is cheaper to drive to Invercargill or Queenstown and catch the cheaper ATR or Jet service so any service will have to compete on the price of road + large aircraft fare.

      Omaru is one that has been tried for years but the competition, which is the private motor car is too strong.

    2. Leaving omaru out for a bit. Te Anau and Mount Cook had an atr operate for a number of years and Wanaka had anywhere up to 70% loadings and at one stage, two flights a day.
      Mount Cook.
      Mount cook has had a consistent service from mount cook airlines/air nz in the past, from the very beginning through to the hs748 and almost 6 years of atr72 (anyone with info ie timetable. . I would love to know the frequency of both the 748 and atr operations into mount cook) apart from the "disappointing loadings" during the summer trials a few years back.. There must have been some sort of patronage to warrant a 68 seat aircraft for six years. ..
      Te Anau.
      Another ATR72 operated destination during the late 90s early 00s now having a 50 seat fokker operating charters. Hey small population in the most isolated corner of this country. .. but one of the most popular and important tourist destinations in this country.
      Steve's write up about air nzs final boarding call mentions the various operator's giving it a go and air nzs chopping and changing. .. "is it a tourist or business operation. .?" and the 60-70% loadings on a 19 seat aircraft. .. that could be a full caravan or a PC12 aircraft. .. as Steve mentions at the end in my wording and interpretation. someone with a canny business view and a golden touch (sounds air..?!) could turn this route/destination into something worth while. .. A hop to wanaka to chc feed for west coast businessmen and women who do business in Wellington or for the more selection of international flights out of Christchurch..?
      Omaru has been tried many timeswith no real success. .. (would sound air have the magic touch? ) but these other ports must have at least some potential to some of these small airlines to build something or whether it be the PC12 filling in time during the lay over in Westport. or even doing seasonal scheduled flights.. There must be something there esp for TA and MC to have had 68 seat aircraft operating even if it is a feed to invercargill or Queenstown. .

    3. The reason to pull out of Mt Cook and Manapouri is that the market changed and the routes no longer were financially viable.

      The Japanese and Korean inclusive tour market was the reason for the original success of those routes with MCA. However in the 1990's this market dried up as the travellers from these markets, becoming younger and more confident took to independent touring with hire cars and camper vans. So the days of 48 tourists taken to Mount Cook for a ski-plane ride then a night at the Hermitage to be picked up the following day for the flight to Queenstown disappeared, and will never return again.

      MCA probably subsidised these route for years in the 1990's to the 2000's before solid financial decisions were made to finally exit the loss making route. The MCA experiment two years ago probably confirmed that there is currently no viable market at Mount Cook.

      Te Anau is very similar in its operation and also for the reason it is not viable.

      Wanaka is different in that the main customer is NZ residents so the operation is competing with the car both to Christchurch and to Queenstown. Any twin TP operation is going to lose out to road travel plus jet economics.

      My view is that these smaller regional towns are to small to support an Airline service but they are ripe for a good air taxi service, e.g. VFR Wanaka-Queenstown-Manapouri in a Caravan or PC12 type. I very much doubt that CAA will approve SE IFR in Queenstown basin, and IFR will increase the cost and create delays that are unjustified.

    4. An old business saying is "adapt or perish" and I would suggest that that is what the Air NZ group does very well.

    5. fras444, an interesting comment about loading. 70% on a high yield route is great (AKL WLG, SYD MEL, LHR CDG) but 70% on low yield route is losing money. Tourist routes tend to be package deals for airfares so are low yield. Low yield routes need load factors in the 90's to make financial sense.