Air NZ's low-cost riposte
Might Air New Zealand's cheap-seats response to Pacific Blue knock its own Freedom Air from the skies?
The introduction of two levels of economy class seats on Air New Zealand's domestic and transtasman services means the airline will be uniquely combining in one plane conditions that are found separately on so-called "full service" and "low cost" (or "no frills") airlines.
Air NZ's new "domestic experience" - its response to the challenge of low-cost carriers Pacific Blue and, possibly later, Qantas' Jetstar - was spelt out by the CEO, Rob Fyfe, at the airline's announcement of its annual results this week. The changes will start to be introduced "by mid-next year".
Fyfe said the B737 aircraft operating on domestic services would be divided into two zones: one incorporating the current 86-89cm seat pitch, with complimentary snacks and beverages supplied on most flights, and catering specifically for frequent flyers and business travellers; the other with the seat pitch reduced to 76-79cm, similar to the airline's competitors, and with snacks and beverages to be paid for.
Fyfe said that these arrangements were to be adopted instead of creating a new airline to meet any domestic challenge, but the changes will also be partly reflected on Air NZ's transtasman services. While retaining their current business class, both the A320 aircraft and the bigger B767-300s, used mainly on the Auckland-Sydney route, will also have two economy zones.
This would appear to have implications for Air NZ's low-cost subsidiary, Freedom Air, especially if arrangements in the larger, lower-fare economy section on Air NZ's transtasman flights become comparable with those offered by Freedom. In those circumstances, it is possible that Freedom will not survive the changes.
According to its website, Freedom operates two or three flights a week from each of Hamilton, Palmerston North and Dunedin to Sydney and Brisbane, and six flights a week from Auckland, and two from each of Wellington, Christchurch and Hamilton to the Gold Coast.
The services from secondary airports Hamilton and Palmerston North, which are used mainly by New Zealand origin passengers and attract relatively few from Australia, would seem most at risk. Those routes are also less likely to attract competing airlines unless they could use aircraft smaller than Pacific Blue's B737-800s or Jetstar's A320s, both of which carry significantly more passengers than Freedom's B737-300s.
However, Dunedin, as a gateway to southern areas of the country, has more evenly balanced traffic and may therefore have a better chance of being served transtasman by the reconfigured A320s.
The future of Freedom Air was not mentioned by Air NZ this week, but with the announcement of the new arrangements to be introduced next year, it may not be long before Freedom's fate is made known.