KEY POINTS:
Virgin Blue CEO Brett Godfrey has confirmed that a third new B737-800 aircraft will become available for Pacific Blue in December, although a decision has yet to be made whether to bring it on to New Zealand routes straight away or next March.
Speaking on the sidelines of
the first World Low Cost Airlines Congress in London last week, Godfrey did indicate, however, that the new plane would not operate "where we are today", implying it would be away from the Auckland-Wellington-Christchurch main trunk.
Godfrey also said that Virgin Blue's "president", Sir Richard Branson, was likely to visit New Zealand for PR purposes in November. He was frank about Branson's ability to attract media attention and sees his involvement as important for branding purposes.
Also at the congress, Tony Davis, CEO of Singapore-based Tiger Airways, confirmed his airline would consider operating in New Zealand when established in Australia. It would "not necessarily" want to enter what could be a bloodbath on the Tasman but thought it possible for Tiger to have "parallel domestic operations in Australia and New Zealand".
The congress, attended by more than 70 low-cost carriers, clearly demonstrated that the challenge to full-service airlines will continue to grow.
While airlines from the Asia-Pacific region were well represented, the congress was notable for the large number of European airlines. As noted by John Hanlon, secretary-general of the European Low Fares Airline Association, these airlines now carry more than 100 million passengers a year, 30 per cent of Europe's total scheduled, point-to-point air traffic.
This growth has been made possible by the liberalised single European aviation market, which allows Europe-based carriers to operate between any airports in the EU, as well as by the existence of a number of secondary airports with lower charges than the main airline hubs.
The European low-cost airlines range from the older established Ryanair and Easyjet, to new carriers still being formed. Ryanair's chief operating officer, Michael Cawley, claims his airline is No 1 in Europe for passengers carried, routes and bases, punctuality ("it costs money to be late"), fewest cancellations and lost bags - all made possible, he says, because Ryanair has the lowest fares.
Andy Harrison, CEO of Easyjet, agrees on the importance of low fares. He says passengers will switch airlines for even a small difference in fares. Ryanair and Easyjet also shared with Southwest, the US pioneering low-cost carrier, the practice of operating without airline partners or code-sharing. Harrison said customers can work out their own connections, via the internet.
Smaller, more recently established carriers are also creating new markets. The Latvian airline, Air Baltic, has initiated services to destinations in the former Soviet states, which it noted were underserved. And the first Russian low-cost carrier, Sky Express, formed just eight months ago and represented by its deputy director general, Elena Ponomaryova, is now flying twice a day to five destinations and has already carried 800,000 passengers.
Specialised markets were mentioned by Westjet of Canada's president, Sean Durphy. He said that, aside from the airline's extensive domestic services, it caters for Canadians seeking warmer climates, especially in the winter, and so operates to leisure destinations in Florida, California and Hawaii, and soon to Jamaica and Mexico.
Meanwhile, new low-cost carriers are also springing up in Asia and the Middle East. Notably, China's first such carrier, Spring Airlines, began flying from its Shanghai base last year. Spring chairman Wang Zhenghua said that operating A320s, and with online ticket sales only, the airline quickly achieved load factors of 95 per cent with the slogan "Let every [all] common people fly".
An eye-catching element of the competition among the Asia Pacific low-cost carriers is their move to long-haul routes. Tiger Airways is already flying from Singapore to Darwin and Perth, with plans to operate on nine domestic Australian routes later this year.
Azran Osman-Rani, the CEO of Air Asia X, the new long-haul subsidiary of the region's largest low-cost airline, Air Asia, based in Kuala Lumpur, was particularly optimistic.
Operating A330-300 aircraft and aiming at 10 million passengers in five years, he noted there are 600 million people in southeast Asia, but less than 10 per cent have been on a plane.
The airline is looking to Australia as its first long-haul destination. When Osman-Rani was asked about competition from Qantas' low-cost subsidiary, Jetstar, which has just begun to fly the Sydney-Kuala Lumpur route, he said he was "really excited" as it would "help create market awareness".
With humour, he commented about Australian food - his airline would serve more attractive food at half the cost.
The A330-300 normally seats around 335 passengers in two-class configuration, but Air Asia X envisages a single class with nearly 400 seats "without sacrificing passenger comfort".
Qantas chief financial officer Peter Gregg was no less upbeat about Jetstar's long-haul services. He referred to the success of Qantas' two-airline strategy, with a combined profit of $861 million in 2006-07.
Jetstar had earlier saved Qantas from having to desert some domestic routes and had already made a small profit on its long-haul services to six Asian destinations plus Hawaii. He envisaged Jetstar would eventually fly to Rome and Athens, which had not been profitable for Qantas.
Meanwhile, as Godfrey noted, Virgin Blue has competed increasingly with Qantas on domestic routes by establishing a national network with connectivity, greater flight frequency, a loyalty programme, lounges and other customer services, but its New Zealand-based subsidiary, Pacific Blue, has remained a truly low-cost carrier.
He added that seven Embraer aircraft due to arrive next year would replace B737-800 planes on Australian routes. The 737s could then be available for another low-cost subsidiary to compete with Jetstar's domestic services.
* David Stone is an independent aviation commentator. He travelled to London courtesy of Air New Zealand.
