Wirraway
14th Mar 2004, 14:57
Sun "Sunday Star Times" NZ
Roll up to the flying circus
14 March 2004
Holidays to Australia and Fiji have never been cheaper, as the airline price war intensifies. Can it get even better, or is it coming at a dangerous cost? Shayne Currie reports.
Irene Muir and Steve Hughan will lose their jobs in the next two months. But they're packing their suitcases, rather than a sulk, and heading to Fiji with their two young daughters, Rachel and Ruby. Their woes will be left in Wellington.
"We're going there to celebrate," says Irene, a Fonterra business analyst who is being made redundant. "We've got over the shock and now we are rewarding ourselves."
The couple's circumstances may be exceptional, but their holiday plans are not. They're following in the jet stream of thousands of other Kiwis, lured to golden beaches by stunningly low airfares.
For $6000 the four will spend three weeks on Fiji's coral coast and Plantation Island - a trip made possible by special Air New Zealand prices. Normally the adventure would cost about $8500.
"We lucked in on that (Holiday Shoppe) deal," says Irene. "If the cheap deals hadn't come out, I wouldn't have booked now, and we wouldn't have taken the kids if it had been too expensive."
Travellers have never had it so good: Sydney and back for $200; Fiji and back with three nights' accommodation for $559.
"The travel industry is absolutely booming. It's never been better," says Travel Agents Association president James Langton.
Domestically, Air New Zealand is carrying 40% more passengers since the introduction of its no-frills Express service in late 2002. It has also introduced cheap fares on the Tasman, and, last week, the Pacific.
By the end of the year we're also likely to have a new domestic airline, more Tasman flights, and special charter services to tourism hotspots such as Fiji.
But how long will the good times last? And should we be more wary of some of the tactics being employed to attract our dollars?
Egos and arguments have flown around the aviation industry since the Wright brothers spent 12 seconds soaring 36 metres high at Kitty Hawk in 1903. Pioneering personalities have dominated the headlines ever since - think Charles Kingsford Smith, Jean Batten, Chuck Yeager, Freddie Laker, Richard Branson and Hamilton's own Ewan Wilson.
The latter three fought vicious battles with bigger competitors but it was Branson who flew highest and furthest. His Virgin brand is thriving, its tail fins flying throughout Australasia offering super-cheap deals and adding more spice to a highly competitive market.
Virgin Blue operates domestic services in Australia, while its Christchurch-based sister company, Pacific Blue, operates Tasman flights out of there and Wellington.
Pacific Blue is headed by former Air New Zealand senior executive Tony Marks. "We are very confident we are not going to be the biggest player but are damn confident we are the best."
Marks says it's not a matter of if but when the airline will start flying domestically in New Zealand. He won't talk specific routes or time frame saying only it will be this calendar year.
It depends on the availability of aircraft - Pacific Blue will receive two more planes within 12 months to add to its existing two Boeing 737s - and airport capacity issues. He says the airline is talking to the Dunedin, Hamilton, Auckland and Tauranga airport companies. We may see international or domestic flights from these centres, or a combination of both. "I spent a lot of time in Tauranga when I was running Zespri," says Marks. "No one is flying trans-Tasman out of the Bay of Plenty, so I would say 'Why not?'."
Giving any more details would see his former colleagues at Air New Zealand touching down in these areas by sunset, he reckons. "When I worked at Air New Zealand, we decided to cover off our competitors. It's a cut-throat game. We want to be leaders, not followers."
Just how cut-throat? Consider the developments of the past month. Travel agency Flight Centre was forced to abandon plans for a charter service to Fiji, offering travellers far cheaper deals than those of the existing airlines on the route, Air New Zealand and Air Pacific.
For weeks various explanations have been given for its failure to lift off. Flight Centre boss Graeme Moore said last week the company got cold feet when it learned the Fijian cabinet would have to give final approval. The Fijian government, which owns 51% of Air Pacific, wanted to know what impact the service would have on existing carriers.
Air New Zealand has denied speaking to Fijian authorities about the service but its response was immediate. It cut fares, repositioned its cut-price carrier Freedom Air to compete head-on with the charter service and took legal action after Airwork, the operator of the planned service, photocopied an aircraft manual belonging to Air New Zealand.
Despite the failure of the Fijian service, the Sunday Star-Times has learned plans for other services are being prepared. Airwork already has the necessary Civil Aviation Authority approvals to fly a passenger service. It just needs a backer.
Langton says the Flight Centre's plans are only the beginning. "There's going to be some major changes in this market. We will see something this year."
So does this mean airfares will fall even more?
Yes, says Victoria University aviation expert Leslie Brown. "There will be sustained price pressure - it's clear customers are chasing the best fare. Domestically, I can't imagine anyone would be interested in paying more to get a hot meal."
Others are not so sure.
Last week Langton flew Air New Zealand business class from Sydney to Auckland. The plastic knife bent. He couldn't slice the lamb. It wasn't an enjoyable experience. "For what they charge . . . it was just awful.
"Airfares may go down further but they will become unsustainable for the airlines. Because the fares are unsustainable and with the services that are offered, the customers are going to say 'Enough's enough - we do want to see quality. I am happy to have a meal and a drink'.
"There's a place for value-based airlines, as there is around the world, but it's going to go round in a circle."
Most analysts do not expect we'll enjoy the marketing-driven deals seen in Europe, where you can hop on a flight for less than E10. New Zealand just doesn't have the population or market, says Brown.
But Marks refuses to rule this out. In Australia, Qantas' no-frills carrier JetStar has offered $29 fares between Sydney and Melbourne. Virgin matched the deal, doubling the number of seats (200,000) on offer at that price. What chance of a similar price for an Auckland-Wellington or Auckland-Christchurch flight?
While low-budget carriers may have made air travel affordable to millions, some simply refuse to jump on board.
If they're skimping on catering costs and other overheads, they reason, there may be similar corner-cutting in crucial areas such as aircraft maintenance and safety.
In Britain, pilots of low-budget carriers have been accused of falling asleep at the controls during flights, or, to save time, ignoring instructions from air traffic controllers.
"The way budget airlines get really low fares to us - and they are staggeringly low fares - is by turning aeroplanes around terribly fast, by getting off on time and by getting back on time," Flight International safety editor David Learmount told the BBC in 2002.
"They like to keep the aeroplanes and the pilots airborne and working. This transfers through to pressure. Pilots, like all of us, want to do their jobs well.
"Although the airlines scrupulously tell them 'You're the final arbiter, don't do anything you consider to be unsafe', it does transfer through to a pressure that will make them feel that they might have to cut corners sometimes - or try to."
Pilots sometimes approached airports too fast, ignored proper flight paths, and reacted aggressively to air controllers' requests. "It doesn't happen often," said Learmount. "But not long ago, it didn't happen at all."
In May 1996, ValuJet Airlines Flight 592 crashed into the Florida Everglades in the United States, killing all 110 people on board.
The Federal Aviation Administration said the low-budget carrier was allowed to grow too fast and that the FAA should have done a better job of managing the airline's infrastructure as it grew, especially its maintenance programme.
"I have never seen or been involved in a passenger airline that grew this fast," FAA administrator David Hinson told a congressional hearing.
Last week, it was revealed the maintenance records of Virgin Blue, which has enjoyed staggering success in Australia, are in disarray. It has been barred from flying new aircraft until it can account for every part on each of its existing planes. From two aircraft in August 2000, the airline now has 40.
A spokesman for Australia's Civil Aviation Safety Authority (Casa) said the "real problem" was that Virgin "has grown quicker than expected" and its maintenance infrastructure was struggling to keep up.
Virgin Blue and Casa have said there are no safety issues for passengers but the problems have meant the airline must fly within an hour of an airport at all times, forcing it to deviate from the most direct path.
Pacific Blue says the problems do not apply to its operation out of New Zealand, a point emphasised by our Civil Aviation Authority. "Pacific Blue uses a New Zealand developed maintenance scheduling system that was independently reviewed by Boeing who is confident that all applicable maintenance tasks are listed and tracked in Pacific Blue's maintenance data base," says authority boss John Jones.
Although it's the small cut-price carriers that generate the big headlines, the revolution in our skies has been largely led by Air New Zealand.
The national carrier has fought back from near financial ruin in 2001, adopting the no-frills model on its domestic, Tasman and now Pacific flights.
Domestically, fares dropped an average 20% but some are up to 45% cheaper, says spokesman Glen Sowry.
The airline, which has just announced a $105.4 million half-year profit, is carrying thousands of first-time travellers. The new-look domestic service carried 1.1m more passengers in its first year.
On the Tasman, passenger numbers are up 11% but Air New Zealand has lost market share. After the Atlantic, it is arguably the most fought-over air route in the world, with a dozen airlines crossing the ditch.
Victoria University's Leslie Brown says the airline faces an even more serious challenge - its long haul routes. Clearly the no-frills model is a success on short flights but it could never work on a flight of more than a few hours.
By mid-year the airline needs to make its multi-million-dollar-decision on which long haul jets will replace its ageing Boeing 767s. New-generation jets can fly longer and further. The airline is also spending $200m upgrading its Boeing 747s.
It's a serious matter, Brown says, because the airline cannot afford to let competitors get the jump.
"(Air New Zealand chief executive) Ralph Norris has talked about delivering value. The industry has some interesting work to do in terms of delivering value to customers on flights of 15 hours plus.
"I don't know the answer. I don't know if it's umpteen channels of entertainment or none at all, or a personal DVD player. Is it a stand-up bar or hot food or cold food?"
Whatever the case, travellers will again be the winners as the competition heats up even more. Bring it on, says Sowry. "We will always do what we need to do to remain competitive."
===========================================
[Pic] Air NZ B747-419
http://www.jetphotos.net/viewphoto.php?id=175023
===========================================
Roll up to the flying circus
14 March 2004
Holidays to Australia and Fiji have never been cheaper, as the airline price war intensifies. Can it get even better, or is it coming at a dangerous cost? Shayne Currie reports.
Irene Muir and Steve Hughan will lose their jobs in the next two months. But they're packing their suitcases, rather than a sulk, and heading to Fiji with their two young daughters, Rachel and Ruby. Their woes will be left in Wellington.
"We're going there to celebrate," says Irene, a Fonterra business analyst who is being made redundant. "We've got over the shock and now we are rewarding ourselves."
The couple's circumstances may be exceptional, but their holiday plans are not. They're following in the jet stream of thousands of other Kiwis, lured to golden beaches by stunningly low airfares.
For $6000 the four will spend three weeks on Fiji's coral coast and Plantation Island - a trip made possible by special Air New Zealand prices. Normally the adventure would cost about $8500.
"We lucked in on that (Holiday Shoppe) deal," says Irene. "If the cheap deals hadn't come out, I wouldn't have booked now, and we wouldn't have taken the kids if it had been too expensive."
Travellers have never had it so good: Sydney and back for $200; Fiji and back with three nights' accommodation for $559.
"The travel industry is absolutely booming. It's never been better," says Travel Agents Association president James Langton.
Domestically, Air New Zealand is carrying 40% more passengers since the introduction of its no-frills Express service in late 2002. It has also introduced cheap fares on the Tasman, and, last week, the Pacific.
By the end of the year we're also likely to have a new domestic airline, more Tasman flights, and special charter services to tourism hotspots such as Fiji.
But how long will the good times last? And should we be more wary of some of the tactics being employed to attract our dollars?
Egos and arguments have flown around the aviation industry since the Wright brothers spent 12 seconds soaring 36 metres high at Kitty Hawk in 1903. Pioneering personalities have dominated the headlines ever since - think Charles Kingsford Smith, Jean Batten, Chuck Yeager, Freddie Laker, Richard Branson and Hamilton's own Ewan Wilson.
The latter three fought vicious battles with bigger competitors but it was Branson who flew highest and furthest. His Virgin brand is thriving, its tail fins flying throughout Australasia offering super-cheap deals and adding more spice to a highly competitive market.
Virgin Blue operates domestic services in Australia, while its Christchurch-based sister company, Pacific Blue, operates Tasman flights out of there and Wellington.
Pacific Blue is headed by former Air New Zealand senior executive Tony Marks. "We are very confident we are not going to be the biggest player but are damn confident we are the best."
Marks says it's not a matter of if but when the airline will start flying domestically in New Zealand. He won't talk specific routes or time frame saying only it will be this calendar year.
It depends on the availability of aircraft - Pacific Blue will receive two more planes within 12 months to add to its existing two Boeing 737s - and airport capacity issues. He says the airline is talking to the Dunedin, Hamilton, Auckland and Tauranga airport companies. We may see international or domestic flights from these centres, or a combination of both. "I spent a lot of time in Tauranga when I was running Zespri," says Marks. "No one is flying trans-Tasman out of the Bay of Plenty, so I would say 'Why not?'."
Giving any more details would see his former colleagues at Air New Zealand touching down in these areas by sunset, he reckons. "When I worked at Air New Zealand, we decided to cover off our competitors. It's a cut-throat game. We want to be leaders, not followers."
Just how cut-throat? Consider the developments of the past month. Travel agency Flight Centre was forced to abandon plans for a charter service to Fiji, offering travellers far cheaper deals than those of the existing airlines on the route, Air New Zealand and Air Pacific.
For weeks various explanations have been given for its failure to lift off. Flight Centre boss Graeme Moore said last week the company got cold feet when it learned the Fijian cabinet would have to give final approval. The Fijian government, which owns 51% of Air Pacific, wanted to know what impact the service would have on existing carriers.
Air New Zealand has denied speaking to Fijian authorities about the service but its response was immediate. It cut fares, repositioned its cut-price carrier Freedom Air to compete head-on with the charter service and took legal action after Airwork, the operator of the planned service, photocopied an aircraft manual belonging to Air New Zealand.
Despite the failure of the Fijian service, the Sunday Star-Times has learned plans for other services are being prepared. Airwork already has the necessary Civil Aviation Authority approvals to fly a passenger service. It just needs a backer.
Langton says the Flight Centre's plans are only the beginning. "There's going to be some major changes in this market. We will see something this year."
So does this mean airfares will fall even more?
Yes, says Victoria University aviation expert Leslie Brown. "There will be sustained price pressure - it's clear customers are chasing the best fare. Domestically, I can't imagine anyone would be interested in paying more to get a hot meal."
Others are not so sure.
Last week Langton flew Air New Zealand business class from Sydney to Auckland. The plastic knife bent. He couldn't slice the lamb. It wasn't an enjoyable experience. "For what they charge . . . it was just awful.
"Airfares may go down further but they will become unsustainable for the airlines. Because the fares are unsustainable and with the services that are offered, the customers are going to say 'Enough's enough - we do want to see quality. I am happy to have a meal and a drink'.
"There's a place for value-based airlines, as there is around the world, but it's going to go round in a circle."
Most analysts do not expect we'll enjoy the marketing-driven deals seen in Europe, where you can hop on a flight for less than E10. New Zealand just doesn't have the population or market, says Brown.
But Marks refuses to rule this out. In Australia, Qantas' no-frills carrier JetStar has offered $29 fares between Sydney and Melbourne. Virgin matched the deal, doubling the number of seats (200,000) on offer at that price. What chance of a similar price for an Auckland-Wellington or Auckland-Christchurch flight?
While low-budget carriers may have made air travel affordable to millions, some simply refuse to jump on board.
If they're skimping on catering costs and other overheads, they reason, there may be similar corner-cutting in crucial areas such as aircraft maintenance and safety.
In Britain, pilots of low-budget carriers have been accused of falling asleep at the controls during flights, or, to save time, ignoring instructions from air traffic controllers.
"The way budget airlines get really low fares to us - and they are staggeringly low fares - is by turning aeroplanes around terribly fast, by getting off on time and by getting back on time," Flight International safety editor David Learmount told the BBC in 2002.
"They like to keep the aeroplanes and the pilots airborne and working. This transfers through to pressure. Pilots, like all of us, want to do their jobs well.
"Although the airlines scrupulously tell them 'You're the final arbiter, don't do anything you consider to be unsafe', it does transfer through to a pressure that will make them feel that they might have to cut corners sometimes - or try to."
Pilots sometimes approached airports too fast, ignored proper flight paths, and reacted aggressively to air controllers' requests. "It doesn't happen often," said Learmount. "But not long ago, it didn't happen at all."
In May 1996, ValuJet Airlines Flight 592 crashed into the Florida Everglades in the United States, killing all 110 people on board.
The Federal Aviation Administration said the low-budget carrier was allowed to grow too fast and that the FAA should have done a better job of managing the airline's infrastructure as it grew, especially its maintenance programme.
"I have never seen or been involved in a passenger airline that grew this fast," FAA administrator David Hinson told a congressional hearing.
Last week, it was revealed the maintenance records of Virgin Blue, which has enjoyed staggering success in Australia, are in disarray. It has been barred from flying new aircraft until it can account for every part on each of its existing planes. From two aircraft in August 2000, the airline now has 40.
A spokesman for Australia's Civil Aviation Safety Authority (Casa) said the "real problem" was that Virgin "has grown quicker than expected" and its maintenance infrastructure was struggling to keep up.
Virgin Blue and Casa have said there are no safety issues for passengers but the problems have meant the airline must fly within an hour of an airport at all times, forcing it to deviate from the most direct path.
Pacific Blue says the problems do not apply to its operation out of New Zealand, a point emphasised by our Civil Aviation Authority. "Pacific Blue uses a New Zealand developed maintenance scheduling system that was independently reviewed by Boeing who is confident that all applicable maintenance tasks are listed and tracked in Pacific Blue's maintenance data base," says authority boss John Jones.
Although it's the small cut-price carriers that generate the big headlines, the revolution in our skies has been largely led by Air New Zealand.
The national carrier has fought back from near financial ruin in 2001, adopting the no-frills model on its domestic, Tasman and now Pacific flights.
Domestically, fares dropped an average 20% but some are up to 45% cheaper, says spokesman Glen Sowry.
The airline, which has just announced a $105.4 million half-year profit, is carrying thousands of first-time travellers. The new-look domestic service carried 1.1m more passengers in its first year.
On the Tasman, passenger numbers are up 11% but Air New Zealand has lost market share. After the Atlantic, it is arguably the most fought-over air route in the world, with a dozen airlines crossing the ditch.
Victoria University's Leslie Brown says the airline faces an even more serious challenge - its long haul routes. Clearly the no-frills model is a success on short flights but it could never work on a flight of more than a few hours.
By mid-year the airline needs to make its multi-million-dollar-decision on which long haul jets will replace its ageing Boeing 767s. New-generation jets can fly longer and further. The airline is also spending $200m upgrading its Boeing 747s.
It's a serious matter, Brown says, because the airline cannot afford to let competitors get the jump.
"(Air New Zealand chief executive) Ralph Norris has talked about delivering value. The industry has some interesting work to do in terms of delivering value to customers on flights of 15 hours plus.
"I don't know the answer. I don't know if it's umpteen channels of entertainment or none at all, or a personal DVD player. Is it a stand-up bar or hot food or cold food?"
Whatever the case, travellers will again be the winners as the competition heats up even more. Bring it on, says Sowry. "We will always do what we need to do to remain competitive."
===========================================
[Pic] Air NZ B747-419
http://www.jetphotos.net/viewphoto.php?id=175023
===========================================