Nothing to do with economies of scale.
Fyfe announces across the board cuts in domestic fares to cut off any new entrant at the pass when fuel prices have never been higher- fares are getting lower.
Whos been having who on for years???.
Absolutely, but it's nice to see Air NZ being pre-emptive as opposed to reactive, and dropping their prices only when virgin starts flying to the regions. Fyfe and the team are doing a great job in my opinion and considering that they have had a virtual domestic monopoly Air NZ have been very focused on keeping airfares low and driving their overhead costs down. They know that this is the only long-term sustainable strategy and they have been one of the leaders in the industry in this area. Air NZ have gone through a major metamorphosis over the last few short years. Going from being just another high cost inefficient legacy carrier to become not only a very efficient but also a very high quality LCC... It's no accident that domestic passenger numbers have increased by more than 40%-50% in the last five years. This wouldn't have happened if airfares hadn't come down.
Virgins' great at blowing it's own trumpet about it's cheap prices but I would guarantee that if they weren't the little guy ( In the NZ market I'm talking about) and the shoe was on the other foot they would be much slower to drop airfares and add additional air services than AIr NZ has been....It's a tread carefully strategy for them just a couple of airplanes to start with, no rapid expansion .. they don't like to take risks. Hats off to Air NZ for being the risk taker in his game and I'm glad to see it's paying dividends literally.
Having said that Dunedin definately could do with some more competition and I wouldn't be surprised to see Dunedin and Queenstown added to the list of destinations when PB gets it's third aircraft in March.