Jetstar flies into black

Jetstar replaced Qantas, which was losing $750,000 a week, on domestic routes Photo / Richard Robinson

Jetstar says it is already making an operating profit on its domestic routes, in contrast to predecessor Qantas which was losing $750,000 a week flying here.

The airline said it was in the black by a "six figure" sum in July, its first full month of operations but there are no details provided as it comes outside the financial year. Parent company Qantas yesterday announced an 87.9 per cent drop in annual net profit to A$117 million.

Jetstar started flying within New Zealand on June 10, replacing Qantas on domestic routes after the full service carrier lost A$32 million here in the year to June 30.

The budget airline's operating costs are far lower than Qantas. Its near-new A320 planes are larger and more efficient and revenue from onboard food sales, hotel and rental car commissions was ahead of target.

Jetstar's chief executive Bruce Buchanan said the early move to profitability could bring forward the airline's plans to expand its network to more New Zealand cities.

Cities including Hamilton, Rotorua, Dunedin and Invercargill could be part of expansion plans and he hoped to have a fourth aircraft based here within the current financial year.

Its transtasman services could also be expanded. A pending announcement on streamlining border procedures would open up possibilities to fly to second tier airports such as Newcastle in Australia, he said.

Despite teething troubles, the airline has carried more than 200,000 domestic customers since starting up. Planes were 78 per cent full in June and in excess of 80 per cent in July.

Buchanan said expansion would be in conjunction with getting staff numbers and training up and it was wary of expanding its Queenstown service before the installation of aircraft navigation equipment to allow operation in poor weather.

Its New Zealand operations are the latest for Jetstar which has domestic services within Australia, operates long haul to Asian destinations and has a subsidiary in Singapore and is part of a joint venture in Vietnam.

Jetstar's total operation returned a profit before tax of A$137 million - an 18 per cent increase on the previous year. Its profit was hit by swine flu in the final quarter, costing the airline A$20 million.

Japanese services were affected by the outbreak, but Jetstar nevertheless made a profit on the market where it is pushing to attract a new, younger group of international travellers.