Casualties mount on Tasman air routes

Long described as an aviation bloodbath, the tally of airline casualties on the Tasman means the route may now be starting to justify its gruesome description.

This week, Air New Zealand said it was pulling its Freedom Air planes off the Melbourne route, meaning people living in Hamilton, Palmerston North and Dunedin will now have to fly to bigger cities for flights to the Victorian capital.

Freedom said there was not enough demand for the "visiting friends and relatives" or holiday travel to justify the service.

It joins a growing list of transtasman airline services being cut back or downgraded to budget status. Qantas' own low-cost wing, Jetstar, is about to take over some of the less lucrative flights from its full-service parent.

The Tasman has long been held out as one of the most competitive air routes in the world, with established carriers like Air New Zealand and Qantas battling it out with the so-called "fifth freedom" airlines.

A fifth freedom refers to one of the different kind of rights airlines are given to fly between, or within, different jurisdictions. New Zealand allows airlines based in other countries - such as Chile, Singapore, Dubai or the US - to pick up passengers from here and take them to Australia. Other countries, such as Australia, protect their national airlines from this kind of competition.

Airlines such as Thai, Garuda and others were able to make a flight across the Tasman to pick up New Zealanders at relatively low cost, before flying on to their final destination. The arrival of low-cost carriers like Pacific Blue - and Air New Zealand's own move to a low-cost model - means that ticket prices on the Tasman have fallen dramatically.

Air New Zealand is trying to differentiate the services between Freedom and its "full-service brand" as an attempt to identify which routes are suitable for leisure and family travel, and which are more popular with business travellers.

Business travellers are willing to pay higher-priced tickets, but require a more expensive service, which includes food and drink. They also need more freedom to alter itineraries if plans change.

Air New Zealand is trying to save money on its Tasman and Pacific Island routes by putting all its fleet of Airbus A320 short-haul aircraft into a single operating company.

Rob Fyfe, Air New Zealand's group general manager of airlines, said earlier this year that its proposed short-haul strategy involved "a new approach to create a sustainable operating model in an environment of capacity dumping and yield decline of about 25 per cent" on the Tasman over the past two years.

Cabin crew who worked on the domestic Boeing 737 fleet would stay with that aircraft type while a common pool of A320 crew would be used across Freedom and Air New Zealand aircraft. The whole plan is designed to cut the cost of flying the Tasman by 10 per cent.

Air New Zealand has so far been able to successfully pre-empt the competitive pressure of low-cost rivals like Pacific Blue by cutting its own costs and fares on routes likely to be targeted by new competitors.

Pacific Blue, the international wing of Australian budget carrier Virgin Blue, will make its first flights between New Zealand and Tonga from the end of next month.

It will be the first time Tonga will be serviced by a low-cost carrier, which Pacific Blue says will provide an "affordable alternative to the existing traditional airlines servicing the country".

The new flights to Tonga will be the fourth South Pacific destination serviced by Pacific Blue after the launch of services from Australia to Vanuatu and Fiji last year.

Its Auckland to Tonga service will initially depart three days a week on Monday, Thursday and Saturday.

Pacific Blue said that its forays into Pacific Island routes had made a big difference to the tourism industry. The number of people travelling between Fiji and Brisbane had risen by 56 per cent.

The rising cost of fuel is making it even more difficult to earn any money on the Tasman. The International Air Transport Association said this week soaring fuel prices would mean the global airline business would lose US$7.4 billion in 2005.

Giovanni Bisignani, IATA director-general and CEO, said oil was "once again robbing the industry of a return to profitability". He said the total fuel bill for the world's airlines had more than doubled to just under US$100 billion in less than two years.

US airlines Delta and Northwest filed for bankruptcy protection this week, staggering under the weight of high fuel prices, competition from low-fare rivals and crippling pension obligations.

* A strike by aircraft machinists at Boeing's Seattle headquarters has come at just the wrong time for Air New Zealand, as two of its new Boeing 777-200ER (extended range) planes are on the stalled production line.

Air New Zealand is cancelling some of its Christchurch to Los Angeles flights, while other services due to have been flown with the new planes are being taken over by its older Boeing 767 planes.

The second of Air New Zealand's fleet of eight Boeing 747-400s has just come out of the hangar with its new interior and seats. 

Freedom Air: No more flights to Melbourne or overlapping services with Air NZ.

Thai: No more flights between Auckland and Brisbane.

Pacific Blue: Launched flights from Auckland in May, after cutting back its services to Wellington.

Emirates: Stopped flights between Christchurch and Melbourne in July, now flies from Christchurch to Sydney (and then on to Dubai).

Qantas/Jetstar: From December 1, Jetstar will start flying from Christchurch to Sydney, Melbourne, Brisbane and the Gold Coast. These replace existing Qantas services into the city.