OK, lets assume that Air NZ is not guilty of predatory pricing or other illegal activities and that Origin Pacific went down the tube due to a combination of bad management and unavoidable externalities (QF's cancellation of their code-share agreement, leaving QO with significant debt commitments based on an assumed business case.) Can happen. It's called capitalism and it works pretty well most of the time.
The scenario as from now?
NZ won't put their prices up and will still make chunks of money. And no-one will really notice.
How?
NZ currently has a priceband structure of $86/$110/$170 NSN-WLG one-way.
Assuming that the market is not overly price-sensitive (and why should it be? Look at the options - via Picton and Interisland...?), expect the availability of $86 seats to drop dramatically.
Why?
Because NZ was
a) either cross-subsidising its non-trunk (competitive) services on the assumption that QO was circling the drain or
b) working at acceptable margins
both with decent loadfactors.
QO's demise takes 192 seats out of the Monday WLG-NSN market, reducing the total offering by about a third. (Check the maths, I've made some assumptions on configurations, but I think I'm pretty close - QO with 6 J41 ops @ 32 seats, NZ with 6 SF3 @ 33 and 4 DH3 @ 48)
Significantly greater demand for NZ's services, NZ closes the cheaper buckets, trickle-feeds more capacity and keeps things on simmer.
(I think someone at NZ's actually asleep at the switch - they haven't done this yet..)
Last edited by RevMan2; 11th Aug 2006 at 15:22.