AIR - Air NZ.

[Jaa]

I think you right but that can still leave profit for AIR on the US route.

Maybe but I consider the US routes and their trans tasman feeders to be earning Air NZ above normal levels of profit. Such above normal levels attract competition.

[Beagle]

C.L. commented that people stepping off their Perth flights were saying they were felling in much better nick when flown on the Dreamliner than previous generation aircraft.
Some are reported in Australian Aviation magazine as saying they'll never fly an old tech airliner again. Imagine how much competitive advantage Air would have with a fleet of 18 Dreamliners all ordered ages ago in a bulk discounted deal when they used to cost a lot less Meanwhile over at the handicapped and cash strapped Kangaroo airline they've had to defer deliveries of their dreamliners till 2020 due to lack of capital resources, (read crappy management and the Australian unions have them by the balls and always will).
Who wants to fly long haul in an old tech airliner with harsh cabin altitude and super dry humidity and stale air ? Its not just about ticket price.

[slimwin]

It is for about 200 of the pax Roger.

[tricha]

Jaa, profit margins are small in this industry.

Remember Quantas profit margins overall are negative the more they fly the more they loose.

AIR profit margins are positive and getting better. It might take a long time before AIR get serious competition.

AIR profits are because they screw the average Kiwi and eliminate the average competitor through, unfair practices, backed by the NZ govt.

Ask Origin Pacific and others

[modandm]

I don't want to go into too much detail but the declining NZD is quite bad for AIR. No things don't cancel themselves out sorry. As a rough guide, 1c change in NZD USD = 1c change in normalised EPS. So from 30c based on 82c we are looking more like 26c now - though hedging will shield us this year. Still growth but...

Re China eastern - bad news, but not hugely significant in the scheme of a network.

Re Qantas, US competition on trans-pac, I don't see anything has changed. Yes Qantas has gone A380 to DFW, so what. Capacity increases are in line with demand. Regarding the Aussie feed to NZ trans-pac services this is not as significant as some would have you think. My impression is since Qantas pulled off AKL-LAX, AIR has been less aggressive in poaching Aussie customers (which are lower yielding anyway). You could call it a case of the two carriers playing nice. No signs of US carriers entering, its all gravy here.

The worry is USD strength for me - a clear negative. Can't see 65c though, 75c maybe. Still like the stock, haven't sold, just less upside...

-mod

[Beagle]

AIR profits are because they screw the average Kiwi and eliminate the average competitor through, unfair practices, backed by the NZ govt.

Ask Origin Pacific and others

C.L. defended regional prices in the shareholders meeting. He said they were making less money from their regional network than they were 5 years ago and that the regions were extremely well served in N.Z. with most towns over 20,000 population well served with regional flights whereas in many other countries they aren't.
He went on to say that AIR's regional prices were amongst the cheapest in the world, I believe from memory he claimed they were the cheapest, followed by Australia which on a regional mileage basis were 29% dearer.
He left me in no doubt that he has a wide range of evidence to back up his claims. He continued, fact is many of the world's aniline's wouldn't even bother running 19 seat aircraft to small regional towns, its very hard to make the economics work, (you still have to pay landing fees, airways charges and other charges and can only amortise them over a small 19 seat aircraft that at times might only have a few passengers on it !! e.g. (A friend of mine flew Nelson-Wellington the other day and there were only 2 people on the aircraft, still have to pay Wellington's exorbitant landing charges).

Yes, you can expect AIR to defend their patch against new entrants, why wouldn't they ?

Living in the regions confers many advantages for people, not the least of which is relatively cheap housing and the ability to get anywhere within their local town within a few minutes.
While a young couple living in Auckland may be able to enjoy inexpensive trips to major cities around N.Z. ask them about trying to save up for an average house in Auckland at $700,000 or about the two hours they spend every day commuting to their jobs and back and the roads being congested even on the weekends. Kind of puts the advantage they have in terms of cheaper airfares into perspective doesn't it !!
I think some people living in the regions need to simply accept that there's the odd disadvantage in doing so and one of them being more expensive air fares on a relative basis.
If there was so much money to be made on a consistent basis Jetstar would be flying the smaller towns then wouldn't they !!

As an example IIRC some Wanganui residents were recently bemoaning the withdrawal of air service to Wellington. Air claimed it was simply uneconomic to fly such a short sector and that residents hadn't supported it. You can't have it both ways. They either price short regional services at a level that gives them a reasonable return on the aircraft employed and people use it, or they lose it and have to use their car instead and charter their own flights for emergencies. I am sorry but the fact of the matter is AIR are running a business and shareholders are not here to grant welfare to small regional towns.

I see overnight the American airlines are up strongly, shareholders seem to be realising that with oil at a relatively low point and heading lower Airlines have the opportunity to lock in lower fuel prices than what's been the prevailing norm in recent years.

[tricha]

[QUOTE=forest;509718]Jaa, profit margins are small in this industry.

Remember Quantas profit margins overall are negative the more they fly the more they loose.

AIR profit margins are positive and getting better. It might take a long time before AIR get serious competition.

It can last as long as it is a state backed " Cartel " and it is allowed to have a monolopy over it competition.
It is a disgusting organisation, govt supported that screws the average Kiwi, by killing off any completion by lowering the price on that area, till they kill them off.

It needs to be split like TeleCON

A bit like the inter islander, without the Bluebridge, can you imagine the cost of getting across the ditch?
I take it the railways run it at a loss to remain in unfair completion

[Beagle]

I am sorry but unless you can back your highly emotional claims with evidence that they're outrageous relative to other airlines in other countries providing similar services to small regions then most people will view your statements as nothing more than having a baseless agenda and / or showing a very limited understanding of the operational costs an airline faces. Perhaps go away and do some research and provide some supporting evidence then people might take you seriously. Ever heard of the concept of using your car if you find short regional airfares so morally offensive as it appears you do ?

[tricha]

I am sorry but unless you can back your highly emotional claims with evidence that they're outrageous relative to other airlines in other countries providing similar services to small regions then most people will view your statements as nothing more than having a baseless agenda and / or showing a very limited understanding of the operational costs an airline faces. Perhaps go away and do some research and provide some supporting evidence then people might take you seriously. Ever heard of the concept of using your car if you find short regional airfares so morally offensive as it appears you do ?

We used to have Origin Pacific here, unfortunately the govt backed "cartel" Air NZ screwd them over by under cutting the fares.
now Air fares are 3 times the price to go to Dorkland. Remember we the tax payer bailed Air NZ out only to have them screw us over, by unfairly taking out any completion.

Shame on them.

Flight cost causes outrage
TRACY NEAL
Last updated 12:00 23/08/2014






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A Nelson woman wants to see greater competition on air services between here and Dunedin, after forking out $1352 for return airfares for herself and her husband to fly to a funeral.


Helen Blaikie expressed her dismay over regional airfares to Air New Zealand, after the last-minute booking to travel to a funeral last month cost them the small fortune.


"We live in Nelson and feel that regional airfares are a ridiculous price, especially when made at a late stage, such as for a funeral.


"Unfortunately we can never plan these events and book airfares ahead," she said.


The cost for the return fares with just carry-on bags was $1352 plus $40 [optional] insurance for the pair, which Blaikie considered "outrageous".


The pair moved to Nelson from Dunedin nine years ago and were aware of the challenges of getting to and from the southern city. Her husband also travelled the route fairly regularly on business.


Blaikie said that efforts to grow tourism in each area were stifled by the high cost of air travel.


"It's just a mission to get there [from Nelson]. There's one good flight that leaves Nelson at 10am and there's only a 20-minute stopover in Christchurch."


There are about 19 options for flights from Nelson to Dunedin each week, ranging from $295 one way for a seat-only fare [plus carry-on bag] to $446 one way for a flexifare.


There is no direct service from Nelson to Dunedin, and flights connect through Christchurch or Wellington. The longest trip, including the stopover, is 6 hours and 30 minutes and the shortest is 2 hours and 25 minutes.


The transit through Wellington or Christchurch was also at the mercy of weather, said Blaikie, who wondered why there could not be at least one direct service a week.


Air New Zealand expressed its sympathies to Blaikie for the circumstances around the need to travel to Dunedin for a funeral, and explained it offered compassionate fares to immediate family members.


Unfortunately, those fares were not available to extended family or close friends, which was a decision made around what the airline could afford to subsidise, and the documentation that could be provided to prove the relationship.


Air New Zealand also said it was the only airline willing to offer the Nelson-Dunedin service, and needed to charge prices accordingly to "make sure it could maintain Nelson as one of its destinations".


Blaikie said she understood the commercial realities facing airlines, but disagreed with Air New Zealand's response it was the only airline willing to offer the air service, considering its past tactics when other airlines have started competing with it.


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"Other airlines over the years have attempted to work from here and have eventually been squeezed out when you conveniently reduced your fares or changed destinations to suit," Blaikie wrote in an email to Air New Zealand.


Air New Zealand said it tried to keep fares "as low as it could".


Factors such as the size of the aircraft and the costs around operating a few flights a day influenced prices.


Flying between two larger airports was going to be more cost-effective for it, and therefore it could keep fares lower.


Air New Zealand said it released fares about 350 days before departure, and offered a range of discounted airfares.


As the plane started to fill up, the fare increased.


Air New Zealand declined to comment on whether the Nelson-Dunedin service was profitable, or worthwhile, or what the average weekly passenger loadings were.


Communications spokeswoman Emma Field said that information was commercially sensitive.


* Comments on this story are now closed.


- The Nelson Mail








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[Beagle]

Well there are a range of alternatives. First of all it is quite obviously more than reasonable to do the drive in about a day and a half. (within a single 24 hour period if you're keen and sharing the driving) or drive to Picton and catch the ferry and then they'd get a main trunk airfare from Wellington to Dunedin. Simply put, you can't make the implied claim they're being extorted as there are alternatives.

The same couple are probably enjoying a short 5 minute drive, (almost free it costs so little petrol) to wherever they need to go in Nelson 365 days a year, while the aforementioned young couple in Auckland might be paying $75 each per week in commuting / parking costs just to get to work and back as well as 10 hours a week doing it. (That's $3,900 each or a total of $7,800 every year in total).

The Govt have done well out of their bail-out of AIR many years ago. For example they just got a $91.45m dividend from AIR, much needed money with the dairy sector now so weak and much of this goes back into the regions in benefits and superannuation. Airlines should never be asked to be a benefit system to benefit one set of customers over another.

Its called human nature. Everyone is keen to bleat like a lamb lost from its mother when they feel they're hard done by. Intelligent / rational people take steps to mitigate high costs whenever they can and realise bleating is a fruitless exercise.

If the couple were so offended by the price they should have spent many hours in their car to alleviate the problem. Remember lots of people in Auckland are spending circa 10 hours every single week in their cars commuting. Is it such a hardship for that couple to spend a bit of time in their car once in a blue moon when they have to travel at reasonably short notice. You generally get at least a couple of days notice of a funeral.

Regarding the price to get to "Dorkland" as you so irrationally put it, AIR have frequent specials on grabaseat at $65 each way to Auckland, what's so unreasonable about that ?

Most intelligent people would be more than happy to celebrate the many positive attributes of living in sunny Nelson rather than wasting time bemoaning the odd disadvantage like expensive flights when once in a blue moon they have to travel at short notice and are too lazy to take steps to mitigate the cost.