Air New Zealand's first half year results due out next week will make interesting reading. We suspect that the second half performance playing out at the moment will prove to be not as good as the first.
Encouraged with the prospect that John Key may consider propping up under performing businesses, Air New Zealand's media spin will be working overtime to ensure that the company is seen to be worthy of "iconic" status.
The prospect of Qantas Airways’ Jetstar entering domestic main trunk routes is likely to create a greater abundance of low-fare seats, as four airlines compete for a smaller pool of passengers.
Air New Zealand Ltd., which is scheduled to report first-half earnings next week, said passenger numbers continued to drop in January, led by a decline in demand for long-haul flights and domestic services.
Total passenger numbers declined 8% to 923,000 last month, while available seat kilometres dropped 6.6%.
Total long-haul passengers fell 11%, reflecting a 13% drop on North American/UK routes and an 8.9% decline on Asia/Japan/UK routes.
Domestic passenger numbers fell 7.8% to 521,000 and on the Tasman and Pacific routes they fell 5.8% to 242,000.
A global economic slump is reducing demand for travel while rivals including Emirates and Singapore Air have added capacity on key routes across the Tasman. This week, Qantas Airways’ low-fare Jetstar unit announced it would begin operating on New Zealand domestic routes following the pull-out of its parent. It kicked off its entry to the market by selling 20,000 NZ$1 fares.
Air New Zealand “will compete vigorously with everyday low fares and a high level of service,” it said in a statement today. Its shares fell 2.2% to 89 cents and have fallen 49% in the past 12 months.
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