Another Kiwi Crash- Fares WILL GO UP

New Zealand is one of the most stunning countries in the world. It stretches 1,600 kilometres (990 mi) from North to South. It has  an area of 268,021 km2  103,483 sq miles slightly bigger than Britain and slightly smaller than Italy. It is made up two main islands  (North and South Islands) plus several smaller islands including  Stewart Island and the Chatam Islands).   Some of my favourite hikes in the world are found in NZ!

That stunning piece of Middle Earth is home to 40 million sheep and just under 4.4 million people - and as of yesterday two major airlines: Air New Zealand (my favourite airline in the world) and Qantas owned Jetstar (my fourth most disliked airline in the world!).

Pacific Blue (part of the Virgin empire) have been running services around New Zealand since 2007. They promised Happy Flying, great planes and great prices (see their fun advertisement which unlike Air New Zealand's fun one features employees with clothes on).

Yesterday Pacific Blue announced that it will completely pull out of the New Zealand domestic market from October, 2010. They will increase trans Tasman (ie Australia-NZ flights), however. 

This means several thousand seats across New Zealand will vanish. Jetstar have announced some increase in capacity and vowed to keep prices low but with only two airlines flying that means there will be a lot fewer cheap options

If you live in Dunedin, the news is really bad. Only Air NZ will service the city meaning that cheap fares will be much much harder to find. The last two times I went to Dunedin, I took the bus for a five hour from Christchurch.  Dunedin airport is so far out of town, that it was much cheaper to take the bus all the way to Christchurch than  to take a taxi to Dunedin airport! Christchurch had many more cheaper air options and the bus trip was quite pleasant. I read, worked and enjoyed the sights. (I would love the train back on this route please). Not every one has this leisurely option though!

On top of the bad news for Kiwi fliers, about 450 Pacific Blue people will lose jobs (though Pacific Blue will need 100 more people for its Trans Tasman services).

New Zealand has struggled to get a competitive market. These airlines have all come and gone in the last 15 years.

  • Ansett New Zealand: 1987-2000 ..did they ever make money? Sold when Air NZ bought Ansett International

  • CityJet: flew Embraer EMB 110 between Wellington, Nelson, Blenheim, & Palmerston North from May to November 1999 - they were grounded over safety irregularities

  • Freedom: started by Air New Zealand to compete with Kiwi International on trans Pacific routes- lasted 1995 to 2007

  • Kiwijet: supposed to start between 2007 and 2009 -never got off the ground

  • Kiwi Travel International Airlines: Operated Trans Pacific from 1994 until 1996 - until their CEO was charged with multiple counts of fraud

  • Origin Pacific: my personal favourite Kiwi competitor- lasted from 1996 to 2006 before collapsing under mountains of debt. I remember once flying from Hamilton to Wellington to Nelson clutching the little drink box and snack the pilots gave out on boarding while the Co Pilot did the safety briefing which was interrupted by a nervous German tourist who begged him to reassure her that the plane was safe. He told her with a straight face that Wellington would be a smooth landing (Wellington is the windiest airport in the world in my opinion)

  • Qantas New Zealand- pulled out of the domestic market and replaced by "low cost" Jetstar

  • Tasman Pacific Airlines -operated as a Qantas New Zealand franchise from 2000 before going broke in 2001

Air transport is crucial in New Zealand. While they have a great intercity bus service operated by three major companies (Naked Bus company is one of them -what is it with nudity in NZ Transport?), taking the bus from the North to the South is not always practical.  It also has a limited under invested rail service. Geographically, the small population base probably means high speed rail is never going to be an option.   
Will another airline try to come in and replace Virgin Blue? I doubt it. By now, financiers must realise that there is no money to be made in the New Zealand market. So I fear higher air fares are here to stay in New Zealand.

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