Air New Zealand is considering merging its two regional subsidiaries with its main jet business to save costs. But one travel agent thinks it could be part of a plan to introduce jet services to some regions. In a written statement Air New Zealand said it was exploring whether there were efficiencies that could be gained by integrating its turbo prop operators Air Nelson and Mount Cook with its jet operation. "To be clear there is no plan to close these regional turbo prop airlines, or to stop flying to any of our current regional destinations, or to stop operating the Q300 and ATR turboprop fleets. We remain committed to growing our turbo prop regional services." Air Nelson, incorporated in 1979, and Mount Cook Airlines, incorporated in 1970, are 100 per cent owned by Air New Zealand. Air New Zealand is 52 per cent owned by the New Zealand Government with the remaining shares listed on the New Zealand stock market. An Air New Zealand's ATR aircraft currently fall under the Mt Cook Airlines operation. The Mount Cook fleet consists of six 68-seat ATR72-500 and 21 ATR72-600 with eight more on order. The ATR72-500 have an average age of 17 years while the ATR72-600 have an average age of three years. House of Travel commercial director Brent Thomas said by merging the companies Air New Zealand would be able to save costs. Earlier this week the national carrier announced a range of cost cutting measures, including deferring aircraft orders, following a company wide review. The review came after the airline downgraded its profit guidance for the 2019 financial year, with profit before tax forecast to be between $340m and $400m for the year to June 30. Thomas said it was possible Air New Zealand was also looking at introducing a jet services to regional New Zealand. "The immediate thought that comes to mind is are they in discussions with any regional airports that could open them up to a jet service." A jet service between Auckland and Nelson was the most obvious choice, he said. "Nelson is incredibly busy from a regional point of view." Nelson had high levels of business passengers on early morning and late afternoon flights and was also extremely popular with inbound tourists flying into Auckland, he said. "It would certainly be popular. "Getting into Nelson sometimes can be quite hard. The services are quite full particularly during the inbound tourism season." Having a jet service the route would result in fewer weather-related delays, something commonly experienced in Nelson, he said. Queenstown was a good example of a region that had successfully converted from turbo prop services to jet services, he said. Savage, spokesman for the aviation workers union E tū, said it had cabin crew collective agreements with Air Nelson and Mount Cook. Air Nelson crew reached new collective agreements at the end of 2018 and Mount Cook cabin crew were currently in bargaining. Historically Air New Zealand regional crew did not work across both the company's airlines, he said. "If Air New Zealand decide to merge or restructure their regional airlines we will of course talk to them about doing that in a way that improves both conditions for cabin crew and the schedules available to the travelling public."
"Having a jet service the route would result in fewer weather-related delays, something commonly experienced in Nelson, he said"
ReplyDeleteUnlikely.
Nelson + Jets = Dream
ReplyDeleteIt's nothing to do with regional jet flying and everything to do with reducing costs around multiple AOC and middle support management duplication
ReplyDeleteI agree with you.
DeleteThis article has been written purely on speculation of a travel agent.
ReplyDeleteIf airnz wanted to fly a jet to the region (as they have just announced they will do - IVC) they don't need to merge the airlines to do that.
Perhaps the reporter could have given Airnz a call before writing this.. ?
...surely if ANZ wanted to up regional services then they'd put jets back on WLG-CHC first?
ReplyDeleteI understood that the prime reason for AirNZ buying Air Nelson (and Eagle) was to lower costs - those airline's staff were paid at lower rates for the same jobs than AirNZ staff.
ReplyDeleteNelson runway is too short for Airbus 321 operations and the locals won't favour/allow an extension in either direction. As a regular flier WLG/NSN and occasional to AKL and CHC, its news to me that"weather related delays" are commonly experienced in NSN. I can recall 2 in my last 6 or so years of flights and in both it was WLG which was out. The Dash aircraft may be heading to retirement in a few years time - but the ATR is all that is needed and I suspect all that NSN Airport has planned for as there is no suggestion in their 2017 annual report or 2018-19 statement of intent that they are looking at a runway extension.
ReplyDeleteIt makes economic sense for Air NZ to merge Mt Cook with Air Nelson to have one company to operate an all ATR regional fleet consisting of ATR72-600 and ATR42-600S (short landing/take off) for smaller runways that will allow standardised cabin/flight crew training/operation, spares and engineering. There is no longer any reason for 2 separate companies operating two different types of aircraft on regional routes.
ReplyDeleteMerging regional fleet operations into Air NZ main company might some money but Air NZ will still need to maintain the same regional fleet operation/engineering/personal infrastructure whether its a standalone entity and an operating division in the main company.
The issue is around maintaining multiple operating certificates, for example, PT129 Ops Audits, Training audits, QA Audits... for each certificate would run into 10,000's if not 100,000's per organisation, so merging into one makes sense.
DeleteMultiple pay roles, admin support etc, are just others, it all adds up over time.
Remember Regional Maintenance, is already merged from Cook/Nelson to Air NZ Regional Maintenance, so they've already merged entities before
ATR42 won't happen.
DeleteAnonymous - Are you referring to the ATR42-600 or the ATR42-600S? Why wont the ATR42 happen?
DeleteDon't need them. Why would you add fleet complexity when you don't need it.
DeleteEven the Q is restricted in some conditions at KK, WR, GS, NP, HK, TU
Anonymous - Adding an ATR42 to existing ATR72 fleet is adding fleet complexity? The ATR42 is the short version of the ATR72 can use the same spares pool, engineering facility, etc.
DeleteLuxon has already publically stated they are first and foremost chasing an electric turboprop to replace the Q300 in the 30-50 seat range. This would also have the performance benefits over the ATR. Don't expect any ATR 42 variant unless electric development takes a hit.
DeleteAnonymous - Electric regional 30-50 seater aircraft are still in development stage meaning commercial applications is still 10 plus years away. I don't think Air NZ wants to keep the Q300's for another 10 years considering they want to trim $30 million plus in cost savings.
DeleteThey have never said they don't want the Q300.
DeleteThey have not said either way, but I do know that various life extension programs are available.
It is completely plausible that they hold onto the Q until the electric path is clearer, even senior management at Nelson have said electric pathway is the future.
New aircraft require capital and Luxon has been clear on that path by deferring delivery of some Jets over the next few years.
"Getting into Nelson sometimes can be quite hard. The services are quite full particularly during the inbound tourism season."
ReplyDeleteReally???
Don't I seem to recall that just a year ago Air NZ pulled the AKL-PPQ flights to free up a Dash 8 to be used to replace an ATR72 on the AKL-NSN route so the latter could be redeployed to services out of TRG? Sounds like a real busy route .... or maybe the congestion is caused by the dumb 2018 downsizing decision?
And really,even if there is a capacity shortfall upgrading from a 50 or 68 seater to a 180 seater is a huge capacity jump. Is the demand really that strong to justify it?
Air NZ could add A320 services between HLZ, WLG and CHC to free up some ATR72's if regional services are merged into the main company.
DeleteThey could change fleet-route mix at any time between jet/prop without merging. As they do WLG/CHC. Those decisions were centralised in 2016.
DeleteThe merge talks have nothing to do with fleets or routes and all to do with personnel contracts/pathways and duplication cost savings.