The return of Virgin Australia and AirAsia X to New Zealand offers some hope that airfares across the Tasman may start to level off.
Virgin Australia this afternoon landed in Queenstown with the first of daily flights from Sydney and Brisbane, the first time the airline has been in this country for 950 days. Air Asia X has begun three-times a week (soon to be daily) flights between Sydney and Auckland with its widebody planes with one-way economy fares on offer for $179 - a sixth of what passengers paying full fares have faced on the Tasman.
Virgin Australia has four-times-a-week Melbourne-Queenstown services also coming and the airline has relaunched on the Tasman with 15,000 promotional fares as low as $409 return. The other good news is that some Kiwi passengers caught by the sudden exit of Virgin Australia and left stranded and angry with flight credits they couldn’t use. They may be able to now, but only if the limited network suits their plans and under the Future Flight Credits scheme they must book by the end of January next year for travel until the end of 2023.
While Virgin Australia is piling into Queenstown, there is no sign of it returning to other routes to bigger New Zealand cities that made it the third biggest operator across the Tasman. Just before the pandemic hit, Air New Zealand had a 37 per cent share of capacity on the Tasman, Qantas had 26 per cent, Virgin Australia 18 per cent, Jetstar 10 per cent and the remaining 9 per cent was shared between other carriers.
Malaysia-based AirAsia X (AAX) was one of those other airlines and the new Auckland-Sydney-Kuala Lumpur route makes more sense than a stopover on the Gold Coast. Its A330s-300s have lie-flat business class seats so the airline has a chance to chip in to the corporate market.
‘‘The traditional transtasman route between Sydney and Auckland is always incredibly popular and we are pleased to be back driving healthy competition in the market on this route,’’ said Benyamin Ismail, chief executive of AAX.
Virgin Australia was the most vulnerable of airlines in this region when Covid-19 hit.
Virgin Australia shut down its New Zealand operation at the start of April, costing 550 to 600 jobs, and the airline entered administration on April 21 with more than $7b in debt. Private equity firm Bain Capital won a fierce bidding war and has recapitalised the airline, installing ex-Jetstar (and former a2 Milk) boss Jayne Hrdlicka as chief executive. It redrew battle lines with Qantas in its core Australian domestic market and took a more rationale approach to long-haul operations.
Hrdlicka said the return was a significant day for Virgin Australia which is using 176-seat Boeing 737-800s on the route.
“Australians and New Zealanders have a close bond and we are proud to be creating a new gateway between the countries for friends and family to visit each other, businesses to flourish and holiday-makers to seek adventure with more choice and great value airfares.’'
The airline was seeing strong demand across its international network over the Christmas school holiday period and flights to Queenstown will increase to 21 per week between December 12 and January 29, with a daily service operating from Brisbane, Sydney and Melbourne, to help meet the demand.
That’s still well short of the 100-plus flights the airline operated across the Tasman before the pandemic and that means the impact on airfares across the market will be limited.
Board of Airline Representatives (Barnz) figures show over summer (between the start of November to the end of March), the number of seats across the Tasman is 22 per cent down on the summer of 2019-2020. The reduced capacity comes as demand for travel continues to defy forecasts and the normally busy Christmas period will be frantic.
Flight Centre general manager of product Victoria Courtney said Virgin Australia’s commitment to Queenstown provides some much-needed competition on a very popular route and extra capacity will benefit Queenstown tourism providers.
‘‘We will need more capacity across the key Tasman routes, Auckland to Sydney, Brisbane, Melbourne for example, before we will see any meaningful impact to transtasman fares. We welcome these and hope they will be a reality soon.’'
Air New Zealand has been under fire for its high fares and says that as with many of its routes, demand on the Tasman is incredibly high, with many of its flights sitting at above 90 per cent passenger loadings for the summer period.
Between November and March, it will be operating at 81 per cent of its pre-Covid capacity, said Jeremy O’Brien, general manager short-haul airline.
‘‘We’re doing what we can to ensure we build in surety for customers - part of that plan is bringing onboard a wet-leased aircraft (from Spain’s Wamos) to operate our Perth route between November and February, he said.
By June next year, it will also have all seven 777-300s back in action, adding a further 14,000 seats per week for customers.
“But it’s not just about getting more aircraft in the air. We also need to make sure we have aircrew to fly them, and engineers to maintain them. We’ve bought back around 2200 staff since the beginning of the year and they all need to be trained,” said O’Brien.
Qantas too has been copping flak over fares and says it has responded to strong demand on the Tasman flights by increasing schedules from this month to operate above pre-Covid capacity.
This month, Qantas is flying more than 140 flights each way across the Tasman every week.
This is a 7 per cent increase on the capacity it flew between Australia and New Zealand in November 2019.
Queenstown is a drawcard for Qantas also, and it has added further flights, operating more than double the capacity per week from Australia than it did in 2019.
The airline sold its last slots at Heathrow in 2020.