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Air New Zealand says it will stop 19-seat Beechcraft 1900D services operated by its Hamilton-based Eagle Air subsidiary by August 2016 and buy four additional ATR 72 turboprops as it moves to consolidate its regional operations.
The 17-strong Beechcraft 1900D operation had lost $1 million a month for the past two years or the equivalent of $26 per one way passenger journey, Air NZ chief executive Christopher Luxon says.
Luxon says Air NZ has been looking at ways to improve the operating economics of its regional services operated by the 19-seat Beechcraft since the start of 2014, given the aircraft had the highest cost per seat because fixed costs were spread over fewer passengers.
As a result, the airline said on Tuesday it would “move all regional flying to either 50 [Dash 8] or 68-seat [ATR 72] aircraft and exit its 19-seat fleet by August 2016″ and that it would also buy an additional four ATRs.
“Our average regional airfare has fallen by two per cent over the past five years and today’s announcement will keep further downward pressure on regional airfares,” Luxon said in a statement on Tuesday.
“On the 13 routes which will move from 19-seat aircraft to more cost effective 50-seat [Dash 8] aircraft we expect to deliver a 15 per cent average fare reduction to our customers.”
However, there were several routes which could not sustain larger aircraft and would therefore be cut.
Moreover, single-route destinations such as Kaitaia, Whakatane and Westport would no longer receive Air NZ flights.
“While today’s news will be disappointing for some communities, Air New Zealand remains resolutely committed to regional New Zealand and the changes announced today will set up our regional business model for future sustainable success,” Luxon said.
“I also acknowledge this news is disappointing for Eagle Airways’ staff. Eagle Airways management, staff and unions will now begin a process of determining the future of the business.”
Luxon said there were good redeployment opportunities for Eagle Airways’ 232 employees within the Air NZ group.
Air NZ’s Link regional operations currently had four ATR 72-600s and 11 ATR 72-500s operated by Mount Cook Airline, 23 Dash 8 Q300s operated by Air Nelson, and the 17 Beechcraft 1900Ds operated by Eagle Airways, according to the airline’s website.
Meanwhile, Air NZ said it was introducing a new Regional Gotta Go domestic fare in response to concerns about the high price of last minute fares on regional routes from February 1 2015.
Available for purchase 90 minutes prior to departure, tickets on a regional route will be available for a fixed price of NZ$169 for a single one way sector and $249 for two or more one way sectors.
“It won’t be available on all flights, depending on demand, but the likelihood of securing a seat is generally good especially if customers have the flexibility to fly at off peak times,” Luxon said.
The topic of Air NZ’s pricing on regional routes was raised during the country’s recent election campaign, when a number of MPs and candidates criticised the carrier for its “horrendous” airfares.
NZ Prime Minister John Key reportedly spoke to the airline about its regional airfares in response to people raising the topic of the high ticket prices during the campaign, while the New Zealand Airports Association said the Commerce Commission should regulate airfares.
Towns that will receive Dash 8 services aircraft:
Kerikeri, Whangarei, Tauranga, Hamilton, Rotorua, Gisborne, Taupo, Wanganui, Palmerston North, Blenheim, Hokitika and Timaru.
Routes that will be dropped as the Beech 1900Ds are withdrawn:
Kaitaia-Auckland; Whakatane-Auckland; Whangarei-Wellington; Taupo-Wellington; Westport-Wellington and Palmerston North-Nelson; Hamilton-Auckland
(Source: Air NZ)
Andy
says:If only Air New Zealand, kept the fares at a reasonable price !
Better to have full aircraft, at little profit, rather than expensive fares
and aircraft empty.
This is a step backwards for Air New Zealand, our National carrier
that not looking after the Nation, “profits before people”
National Goverment are destorying New Zealands infrastructure
doing what they did with the railways, again “all for profit” for the
selected few.
This decsion by Air New Zealand and the Goverment, sad day
indeed, as each aircraft bought employment to the region’s
National have promised a grow in employment, but sadly
it is an illusion, , like a .lot of decision that they have made!
“All for profit, not the people”
marc
says:@Andy
What examples do you have to support your argument?
From what I read, Air NZ are deploying bigger aircraft on all routes (albeit less frequency) to reduce the costs to consumers.
ChrisC
says:Smaill reigonals are a tough gig to make money on. Both Ansett (NZ) and Oriign Pacific folded in this market. Can’t blame Air NZ. The public moan about price gouging on these routes , but Air NZ claim monthly losses of $1 million. Perhaps the issue is the daily flight frequency is too high?
Is there scope to put a single daily 50 seater on some of the axed destinations like Kaitai. Or perhaps some entreprenuerial service with a caravan twice a day – I wonder ? Single engine , single pilot, 14 pax?
Craig
says:@Andy,
Each B1900 flight was losing money even with an average 75-85% load factor. Reducing fares to improve LF to 100% would not make the routes profitable…..