Air New Zealand Readies For Looming Battles

 Having carved out one of the airline industry’s strongest financial records in recent years, Air New Zealand is well positioned to confront a new wave of competitive challenges both at home and overseas.

CEO Christopher Luxon estimates Air New Zealand is one of only about seven airlines globally that are rated as investment grade, a reflection of its consistent performance. The carrier reported a record net profit of NZ$327 million ($208 million) for the fiscal year through June 30—its fourth consecutive year of earnings growth and its 13th in the black.

Luxon notes the airline’s long run of success has been achieved despite external forces such as economic shocks in the European, U.S. and Asian markets, volatile oil prices, and fluctuating exchange rates. This indicates the airline can continue to prosper despite the latest challenges, he says.

Among the potential threats are financial jitters in China and elsewhere in Asia, an influx of Chinese airline capacity, the impending expansion of Australia’s Jetstar to New Zealand regional routes, and the prospect of American Airlines or Qantas entering the U.S.-New Zealand market.

Air New Zealand is “fitter than it’s ever been, and is in a stronger financial position to be able to fight several battles at the same time,” Luxon says. He notes that dealing with volatility in global markets is an inescapable reality of the airline industry. The carriers that can adapt to new situations the quickest are the ones that will thrive, he says.

Having carved out one of the airline industry’s strongest financial records in recent years, Air New Zealand is well positioned to confront a new wave of competitive challenges both at home and overseas.

CEO Christopher Luxon estimates Air New Zealand is one of only about seven airlines globally that are rated as investment grade, a reflection of its consistent performance. The carrier reported a record net profit of NZ$327 million ($208 million) for the fiscal year through June 30—its fourth consecutive year of earnings growth and its 13th in the black.

Luxon notes the airline’s long run of success has been achieved despite external forces such as economic shocks in the European, U.S. and Asian markets, volatile oil prices, and fluctuating exchange rates. This indicates the airline can continue to prosper despite the latest challenges, he says.

Among the potential threats are financial jitters in China and elsewhere in Asia, an influx of Chinese airline capacity, the impending expansion of Australia’s Jetstar to New Zealand regional routes, and the prospect of American Airlines or Qantas entering the U.S.-New Zealand market.

Air New Zealand is “fitter than it’s ever been, and is in a stronger financial position to be able to fight several battles at the same time,” Luxon says. He notes that dealing with volatility in global markets is an inescapable reality of the airline industry. The carriers that can adapt to new situations the quickest are the ones that will thrive, he says.

Adrian Schofield - Aviation Week Network

Sep 03, 2015

Bacon and eggs welcome Jetstar to region

Marion van Dijk Joseph Stermi, left, Delphi Dixon and Frances Steri enjoy a bacon and egg butty at the TVONE Breakfast Show Jetstar Launch at the 1903 Square this morning.

The sizzling sound of 200 eggs frying and the alluring aroma of bacon proved to be a popular way to welcome airline Jetstar to the region.

More than 200 people munched on bacon butties and sipped coffee at a Jetstar launch event in 1903 Square this morning after the airline announced on Monday that Nelson would be one of four regional destinations it will fly from in December.

Eva Knox of Jetstar marketing New Zealand said the response from Nelson had been positive since the announcement was made.

Eva Knox of Jetstar marketing New Zealand.

"People here are really happy about the announcement, it's a chance to bring more people from Wellington and Auckland to the region," she said.

She said 16,000 airfares were sold across New Zealand on Monday after the airline advertised $9 airfares.

If the cheap fare was missed, Knox confirmed that a standard fare between Nelson and Auckland will be $49, and Nelson to Wellington would be $45.

"It's not about us stealing [market] share, it's about expanding the market and getting more people travelling," she said.

"Nelson is the new Queenstown and it's an amazing gateway to the top of the south."

Nelson mother Delphi Dixon said she was thrilled the airline chose Nelson, especially given her family of nine children frequently visit Auckland.

"My husband has family in Auckland, with nine kids we've just taken the van up to Auckland before but [Jetstar] will make a huge difference she said.

Air rivalry in regions welcome

 Air NZ has indicated it will meet Jetstar head-on. Photo / Mark Mitchell

The landscape is littered with airlines that failed to make a go of servicing this country's regions. Passenger numbers can be erratic and any newcomer runs up against Air New Zealand's strong loyalty programmes, pricing power and capacity. Without decrying our national carrier, the benefits to consumers of competition alone provides a reason to applaud Jetstar's confirmation it will start services to Nelson, Napier, New Plymouth and Palmerston North. Competition between the low-cost Qantas subsidiary and the national carrier on main trunk routes has prompted a drop in fares during the past six years. Travellers to and from provincial centres serviced by Jetstar will benefit from more of the same.

The airline has been looking to challenge Air New Zealand's stranglehold in the regions for a couple of years. Now is an appropriate time given reduced fuel costs and the recovery of Qantas. Jetstar can also use surplus aircraft from its parent's QantasLink operation in regional Australia. In at least one respect, its provincial operation here stands a greater chance of survival than that of its predecessors.

Its regional links will feed into its transtasman operation and Qantas's international partners, such as Emirates. Such linkages are vital, as the collapse of Origin Pacific illustrated.

Origin's fate, and that of others, has made airlines wary of venturing into the regions. Pacific Blue, for example, looked at cherry-picking some routes that it reckoned were under-served, but never did. Jetstar seems to have been reasonably astute in its choice of destinations. It has eschewed the likes of Hamilton, Tauranga and Rotorua, presumably in part because they are on the itinerary of increasingly popular self-drive holidays from Auckland. Instead, it has gone for destinations that are more out on a limb but still have potential for increased tourist numbers and business growth.

The secret to Jetstar making these routes profitable is increased overall passenger numbers, rather than expecting to to cut deeply into Air NZ's patronage. The latter is in exceptionally good health, as evidenced by its record $327 million net profit in the latest June year. And it turned its focus to its regional operations as recently as a year ago after the Prime Minister criticised its fares. This led to some fare cuts, improved capacity to some centres, and withdrawal from three unprofitable routes.

Air NZ has indicated it will meet Jetstar head-on. Last week it said it would slash 2 million flights to below $100 in the coming year. It is also spending $300 million upgrading its regional fleet over the next four years. This, it says, will give it a cost advantage. The challenge facing Jetstar should not be underestimated. Air NZ has done a wonderful job confronting Qantas internationally and its budget subsidiary on main trunk routes.

Jetstar's introduction to NZ was marred by an array of self-inflicted wounds. It is now much more sure-footed, and has been prepared to deliver a vote of confidence in the regions. This infusion of competition is extremely welcome, not least for the provincial centres that will benefit the most.

Current as of 02/09/15 11:19AM NZST

5:00 AM Tuesday Sep 1, 2015

Jetstar expansion in other regions not ruled out

Jetstar hasn't ruled out flight paths to other parts of New Zealand.

The budget airline announced new routes to Napier, Nelson, Palmerston North and New Plymouth yesterday.

• READ MORE: Jetstar names its newest NZ destinations

It also considered Hamilton, Tauranga, Rotorua and Invercargill for the hotly contested routes, and Jetstar chief executive David Hall says valuable relationships forged will continue.

"Don't be despondent, we're going to keep the dialogue open because we're looking for opportunities to further grow in more destinations than we've announced," he told reporters.

Jetstar's commitment to bringing low fares and increased competition to communities around the country was for the long-term, Mr Hall said.

Economic Development Minister Steven Joyce says he's pleased Mr Hall said the four destinations were the "initial" additions.

A sustainable flight network encourages visitors to get off the beaten track, Tourism Industry Association chief executive Chris Roberts says.

"Other regions ... should keep building their cases for Jetstar to service them in future."

Waikato put its case strongly and is disappointed by the decision, Hamilton Mayor Julie Hardaker says.

"We will keep working with Jetstar to get them here."

Rotorua Airport chief executive Nicole Brewer wants to continue discussions with Jetstar and Air New Zealand.

"We are continuing to focus on areas of long-term growth.

"For Rotorua, this means increased capacity, as well as encouraging more travellers to connect via air rather than road to and from Auckland, and a direct link to Queenstown."

If regions really want a strong chance of attracting a Jetstar route - perhaps they need to entice a Jetstar official to live there.

Jetstar NZ head Grant Kerr lives in Nelson, the only one of the new destinations to have routes to Auckland and Wellington.

"I know I've got a big smile on my face about today because I also live in Nelson, so commuting for me is fantastic," he told reporters yesterday.

NZN

TV3 Tuesday 1 Sep 2015 5:28 a.m.

Read more: http://www.3news.co.nz/business/jetstar-expansion-in-other-regions-not-ruled-out-2015090105#ixzz3kX6ef1iI

Read more: http://www.3news.co.nz/business/jetstar-expansion-in-other-regions-not-ruled-out-2015090105#ixzz3kX6XD0WV

Read more: http://www.3news.co.nz/business/jetstar-expansion-in-other-regions-not-ruled-out-2015090105#ixzz3kX6RIc12

Travellers to benefit from new domestic air competition

Kiwi travellers wanting to take advantage of their own backyard could see a prolonged golden period for travel ahead. That is the view of the tourism industry that has welcomed price cuts offered by the two main airlines serving New Zealand's regions, Air New Zealand and Jetstar, a subsidiary of Australia's Qantas Airways.

On Monday Air New Zealand joined Jetstar in a price war for the regions, in offering cheap fares. Jetstar's $9 special fares were on new routes to Nelson, Napier, Palmerston North and New Plymouth.

One tourism boss said it was possible the country would experience a golden period for travel ahead, while another said New Zealand had probably never seen this level of activity in new airline services.

However there was a warning that cheaper air tickets would only remain as long as fuel prices remained low. Aviation fuel like other commodities has weakened during the last year.

One aviation website has called 2015 a year when everyone can make money given the fuel price slide. Certainly some airlines are doing well.

Earlier this month Air New Zealand announced a record annual net profit of $327 million. Chief executive Christopher Luxon said lower fuel prices and more seats would lead to cheaper flights. The airline would offer more than two million domestic fares for less than $100 over the next year, Luxon said at the profit announcement.

Tourism Industry Association New Zealand chief executive Chris Roberts said there was no reason, apart from changes to fuel, that cheaper flight ticket offers should not last for Kiwis with Jetstar in for the long haul on its low budget approach.

"Certainly there is an expectation (ticket prices) will come down, and allowing for any other external factors such as fuel prices, remain down," Roberts said.

"Certainly the signs are from Jetstar and the model they run, that they run a low cost service. Air New Zealand has welcomed competition and says it's able to respond so I think there will be more cheap fares available across both airlines for the travelling public."

Christchurch and Canterbury Tourism (CCT) spokeswoman Caroline Blanchfield said it could be a golden period ahead for domestic travellers, and international tourists would also be able to pop around New Zealand more easily. Business travellers would also benefit.

"We've (CCT) got a focus on this domestic travel and we think the more Kiwis moving around their own country the better it is," Blanchfield said.

"The old saying is 'don't leave home till you've seen the country' ... rather than jump on a plane and go to Australia. But there are so many things you can do in."

Blanchfield said she had just spent two days on New Zealand domestic activities like jetboating and quad-biking while hosting a group of professional conference organisers on what sights and venues were available in the South Island. Those organisers in turn could bring extra business tourism into centres like Christchurch for the benefit of the regional economy.

The potential for a longer period of reduced prices came after a period of "expensive" tickets on some routes. "People only buy what they can afford ... so any competition is healthy."

That lower prices could last was being demonstrated by Air New Zealand's long running grabaseat deals, Blanchfield said.

Roberts said the airlines would have to be careful not to get into a price war situation. When Qantas and Virgin Australia had competed vigorously on some routes across the Tasman in 2013 and 2014 both airlines had seen "heavy losses" within their regional operations.

"That market's now settled down and there is still good competition and reasonable fares available ... (but) they're not killing themselves."

Towns such as Invercargill that had missed out on Jetstar's New Zealand regional expansion into centres like Napier and Nelson, should not give up the fight, and keep building a case why a new service would be patronised, Roberts said.

"We've seen incredible growth (for consumers) in the last six months. It's not only Jetstar, there's other airlines that have expanded to take over the routes Air New Zealand is dropping. (Also) there's returning airlines like Origin, new airlines like Kiwi, we've probably never seen this level of activity."

Jetstar chief executive David Hall said Jetstar would continue to look for opportunities within other regions, but would not give a timeframe for any further new services. "The ones we've chosen this time around, and I say our initial launch, have very much been ones we believe that we can grow very quickly, can stimulate with low fares."

 - Stuff

ALAN WOOD

Last updated 16:15, August 31 2015

'There's a lot of risk': Jetstar's new domestic routes will have a hard time taking off - commentator

•  

Mon, Aug 31

       

 

A leading aviation commentator is sceptical demands for Jetstar's new domestic routes will take off.

Price war breaks out as Jetstar takes on Air NZ at home

02:20

Consumers are the big winners in Jetstar's NZ domestic expansion. Source: ONE News

Today Jetstar announced you can fly return to Auckland from Nelson, Napier, New Plymouth and Palmerston North plus a return route between Nelson and Wellington.

But aviation commentator Peter Clarke says the flights to Auckland and Wellington do little to connect between the regions.

"I think there is a lot of risk in New Zealand. In regional New Zealand there's a downturn. It's quite severe in some of the rural areas. Air New Zealand's pulled out of some areas".

But the government welcomes Jetstar's new flight routes.

"It fits in with the promotion of tourism, economic development and moving people into the regions", says Economic Development Minister Steven Joyce.

Air New Zealand is offering rock-bottom domestic fares hot on the heels of Jetstar's announcement of the four new domestic routes.

The national carrier was offering the $9 one-way fares on 22 different flight routes across the country on grabaseat website today.

Earlier today Hamilton's mayor said people living in the Waikato would be upset Hamilton was not named in Jetstar's domestic destination announcement.

Julie Hardaker said she was very disappointed by the decision and she would continue fighting for Jetstar to include Hamilton as a destination.

"We will keep working with Jetstar to get them here, as competition in the domestic market is essential for fare pricing and flexibility of travel options," Ms Hardaker said.

Ms Hardaker said she believes being situated rather close to Auckland Airport and having an easier route network were factors in why Hamilton was not chosen.

---

Jetstar announcement thrills Nelson business leaders

Nelson civic and business leaders have reacted with delight to news that Jetstar is coming to Nelson, ushering in a new era of competition and cheaper flights. Locals are also planning to capitalise on the new low cost routes.

The airline announced this morning that it would begin flying Nelson-Auckland in December and Nelson-Wellington in February as it enters the regional market.

With Originair already flying Nelson-Palmerston North and soon to move into the Wellington market, and Kiwi International promising cheap domestic flights when it takes off, regional air travel looks set more competition for passenger dollars than ever before.

Nelson Airport chief executive Rob Evans said the announcement was "the game-changer for regional New Zealand and particularly for Nelson".

"We've been the big winner, we've got both Auckland and Wellington in the initial phase, the only destination to have two new routes."

He said Jetstar would fly 27 Auckland-Nelson  flights a week from December 1 this year, and 21 Nelson-Wellington flights  from February 1 next year.

That equated to 249,500 new seats in and out of Nelson over 12 months.

"It's a huge investment from their perspective.

"We've got the capacity we've been demanding and the cheaper air rates, we've now got to jump on board and use them."​

Evans said Air New Zealand was "a magnificent airline" with a lot of capacity and a good loyal customer base, and would respond to the challenge.

"This is good for the consumer."

He said the announcement gave the airport company the impetus it needed for its plan to redevelop or replace the 40-year-old Nelson Airport.

Nelson MP Nick Smith said it was "fantastic news" for Nelson, which depended on its links with other parts of New Zealand.

"Studies show that on average air fares are 30 per cent less where there is effective competition and that amounts to millions of dollars of savings and thousands more visitors to Nelson."

Smith said the Jetstar's link was important to the visitor industry but the biggest gain for Nelson was making nationwide businesses viable in Nelson and for people to be able to easily connect across the country through more competitive air services.

He was "pretty loyal" to Air New Zealand, a good company that deserved credit for its substantial investment in maintenance services in Nelson.

"But I still believe the region's overall benefit is in having a choice of services," ​Smith said.

Nelson Tasman Tourism  chief executive Lynda Keene said the increased competition was "really great news"' for Nelson and Tasman residents.

Grandparents who travelled  once a year might be able to go three or four times.

"It's definitely going to open up a lot more opportunities."

It was also really exciting from a business perspective, she said.

"We're really fortunate to have a lot of frequency with Air New Zealand which has been a wonderful contributor to the region, but Jetstar coming in is going to make it a bit easier for people coming out of Auckland, Wellington or Christchurch, particularly for trans-Tasman services."

With Originair and Kiwi International joining the regional competition, "it's raining planes", Keene said.

Nelson Mayor Rachel Reese said the city had got behind the campaign to bring Jetstar to Nelson and many  people would be celebrating the news, which would bring a significant economic benefit for the region.

All agree that Jetstar will face stiff competition from Air New Zealand, which announced last week that it will slash two million flights to below $100 over the next year.

Nelson's once-thriving regional airline Origin Pacific went under in 2006 owing $21 million. Brutal competitive tactics by Air New Zealand were widely blamed. More than 200 staff lost their jobs.

The announcement adds further heat to the Nelson air travel market with Originair having started on the Nelson-Palmerston North route earlier this month, and Kiwi Regional Airlines announcing it will be offering $79 tickets from Nelson to Hamilton and Dunedin from October 28.

Joy Davenport said on Facebook that the announcement would not stop her from flying Air New Zealand.

"But with a little competition, I'm hoping the prices of flights will come down."

 - Stuff.co.nz

BILL MOORE

Last updated 15:58, August 31 2015

Jetstar names its newest NZ destinations

Jetstar's new flight destinations have sparked a price war.

The budget airline announced today its adding flights to Napier, New Plymouth, Palmerston North and Nelson.

The four regional centres were chosen from a shortlist of seven destinations, with Rotorua, Hamilton and Invercargill missing out.

Air New Zealand followed suit offering $9 national fares on "grabaseat".

The national airline has said it won't be undercut in its home market.

Last Wednesday it said it would offer up to two million domestic fares under $100 and boost domestic capacity eight per cent this year.

"We are confident of our ability to stimulate the economy to fill those seats," chief executive Christopher Luxon said.

"We don't lose to Australians at home."

Transport Minister Simon Bridges and Economic Development Minister Steven Joyce were at Wellington Airport this morning where the announcement was made.

Jetstar will fly the Nelson-to-Auckland and Napier-to-Auckland routes from the beginning of December.

While New Plymouth-to-Auckland, Palmerston North-to-Auckland and Nelson-to-Wellington flights will take off from early next year with the first flight on February 1.

Jetstar Australia and New Zealand chief executive David Hall says the company's New Zealand management went to eight centres to make their decision.

"The feedback we’ve received from local councils, airports, economic agencies, businesses, and the tourism and travel trade has been invaluable in helping us to choose our first four destinations," he says.

Mr Hall says the four centres will help grow the market. It will also create 100 jobs for pilots, cabin crew and ground crew.

Despite Hamilton, Rotorua, Tauranga and Invercargill missing out this time, Mr Hall says the company will keep talking to stakeholders because they all want more airline competition.

Mr Bridges says the competition will help bring flight costs down for the regions and will be a boost for the regional aviation market.

The Qantas subsidiary currently flies Airbus A320 jets to Auckland, Wellington, Christchurch, Dunedin and Queenstown.

It will use five 50-seat Bombardier Q300 turboprops on the new routes.

The airline has a 17 percent share of the New Zealand domestic airline market, which is dominated by Air NZ.

Nelson Mayor Rachel Reese says the new route will open the city up to more domestic passengers, businesspeople and tourists.

"We encourage people from around New Zealand (and the world) to take the opportunity to come and visit our corner of the world. They may not want to leave," she says.

Business Central chief executive John Milford hopes the new routes and the extra people they bring to central New Zealand will help bring new businesses to the regions.

He thanked Jetstar for "showing great faith" in the regions.

Meanwhile, Labour says the Government should book their airfares like most other New Zealanders – by booking the "best fare of the day".

Transport spokesman Phil Twyford believes this would save money for taxpayers, while boosting services to regional New Zealand.

"Our heartland towns have a lot to gain from Jetstar's new services announced today and the Government could do its bit by pledging the tens of millions of dollars it spends annually really do go to the airline offering the best price.

"I challenge the Government to make the most of it – starting with a plan for public servants to always buy the best fare on the day."

Jetstar is launching the new routes with special one-way $9 fares. The airline's website briefly went down this morning following the announcement.

3 News / NZN

Great support for Nelson here from Mayor Rachel Reese  http://www.3news.co.nz/business/jetstar-names-its-newest-nz-destinations-2015083109#ixzz3kX0NTDCC

Air NZ joins $9 price war, Jetstar announces new NZ routes

Bargain hunters snapped up more than 15,000 airline tickets at $9 each on new regional routes announced by Jetstar, during a four-hour sale on Monday.

Air New Zealand hit back, releasing hundreds of $9 fares to and from Hamilton, Rotorua, Tauranga and Invercargill, which it said had been "left out" of Jetstar's plans..

Jetstar held its sale to promote the expansion of its network to Nelson, Napier, Palmerston North and New Plymouth, in what pundits believed could herald the start of a price war.

The sale was originally due to run until 1.30pm, but the airline extended it for two hours after a computer server crashed, leaving frustrated travellers unable to buy tickets when the sale first opened.

Spokesman Phil Boeyen said the server crash appeared to be a case of "unfortunate timing".

The low-cost carrier announced the new routes between the regions and Auckland on Monday, with the Nelson flights also going to Wellington.

It has since moved on to "the second stage" of its sale, which runs until midnight on Tuesday, offering tickets on the regional routes in December, February and March priced at $25.

'It's raining planes'

Nelson was the big winner as it was the only centre with two destinations – Wellington and Auckland.

Nelson Mayor Rachel Reese said she had kept the announcement secret for 36 hours.

"You can hear the people cheering from Trafalgar St," she told a crowd at Wellington Airport.

Wellington Mayor Celia Wade-Brown said there was now more reason to extend Wellington's runway as people from the top of the South Island now had more opportunity to fly to Wellington then elsewhere overseas.

Nelson MP Nick Smith said it was "fantastic news" for Nelson, an isolated region that depended on the strengths of its links with other parts of New Zealand.

"Studies show that on average air fares are 30 per cent less where there is effective competition and that amounts to millions of dollars of savings and thousands more visitors to Nelson."

Smith said the Jetstar link was important to the visitor industry, but the biggest gain for Nelson was making nationwide businesses viable in Nelson and for people to be able to easily connect across the country through more competitive air services.

​"With house prices going through the roof in Auckland there is an opportunity for us to attract businesses to our region."

He was "pretty loyal" to Air New Zealand,  and said it deserved credit for its substantial investment in maintenance services in Nelson.

"But I still believe the region's overall benefit is in having a choice of services," ​Smith said.

Nelson Tasman Tourism chief executive Lynda Keene said the increased competition was "really great news" for Nelson and Tasman residents.

"Grandparents who might go to Dunedin, Auckland or Christchurch once a year might be able to travel three or four times a year. It's definitely going to open up a lot more opportunities."

It was also really exciting from a business perspective, she said.

"We're really fortunate to have a lot of frequency with Air New Zealand which has been a wonderful contributor to the region, but Jetstar coming in is going to make it a bit easier for people coming out of Auckland, Wellington or Christchurch, particularly for trans-Tasman services."

It would also make international travel more accessible through Jetstar's links with Emirates.

With Originair and Kiwi  Regional Airlines joining the regional competition, "it's raining planes", Keene said.

'It's only good news'

Palmerston North mayor Grant Smith said the announcement was welcome for the city and the region.

"The region will get lower fares and it will also help people who otherwise couldn't travel."

Smith expected the move to give tourism in the region a boost and help retailers and agribusiness as well.

"Attractions like the [Manawatu] Gorge and the Tui brewery will become more accessible."

New Plymouth Mayor Andrew Judd also said Jetstar's expansion was great news.

"Having both Air New Zealand and Jetstar operating out of New Plymouth will give passengers more choice and more opportunity to afford to fly, and give visitors even more reasons to come here," Judd said.

The New Plymouth District Council was already planning extensions at the airport's terminal, runway apron and public car park, with construction due to start in May next year.

Some disappointment

But some southern leaders were disappointed Invercargill was not a new destination.

Southland District Mayor Gary Tong said he was not involved in the consultation with Jetstar, and it was disappointing the airline had chosen not to come.

But he was hopeful Jetstar would consider Invercargill again.

"There are certainly the numbers [of people] coming south."

Venture Southland chief executive Paul Casson said although it was disappointing, other airlines might be interested.

"Visitor numbers look good for the next few months ... there may be other airlines who want to fly into our region."

Jetstar had made a commercial decision to support smaller regions than Southland, he said.

"Luckily we've got Air New Zealand, and they're very good to us, which we've seen last week in a reduction of fares."

'Very competitive process'

Economic Development Minister Steven Joyce and Transport Minister Simon Bridges welcomed increased competition in the regional aviation market.

Transport linkages are crucial for regional development and the new air linkages would help boost business and tourism traffic into regions like Taranaki, Hawke's Bay, Nelson and Manawatu/Whanganui," Joyce said.

"I know it's been a very competitive process between the different regions for the opportunity to host the new carrier. I'm confident that this expansion of regional routes will be successful and lead to more competition on regional routes in the future," he said.

The first of Jetstar's fleet of five regional 50-seat Bombardier Q300 aircraft to service the routes arrived in Wellington over the weekend.

Jetstar will face stiff competition from national airline Air New Zealand, which announced last week that it will slash two million flights to below $100 over the next year.

The announcement came as Air New Zealand celebrated record profits of $327 million in the year to June 30.

Air NZ chief executive Christopher Luxon said lower fuel prices and more seats would drive down costs for fliers.

House of Travel commercial planning director Brent Thomas said competition from Jetstar also played a part.

 - Stuff

TOM HUNT, SUE TEODORO, BILL MOORE, TOM PULLAR-STRECKER AND BLANTON SMITH

Last updated 17:02, August 31 2015

Jetstar news a hit with travellers

Regional air fare wars have begun with Air New Zealand moving within hours to match Jetstar's announcement of a $9 ticket sale to destinations including Nelson. Business and civic leaders predicted on Monday that Jetstar's move into regional routes would provide benefits for consumers and that was quickly borne out.

Demand was so great that Jetstar's website crashed, and it it extended its planned four-hour sale well into the afternoon.

READ MORE: * Nelson 'big winner' in Jetstar move * Jetstar announces new regional routes

The excitement is set to continue in Nelson with a special public breakfast at the 1903 site opposite the Church Steps on Wednesday to be broadcast by TV One.

And new airline Kiwi International has weighed in with a claim that it will be "the best bet for regional direct flights".

Jetstar unveiled its plans at 9am on Monday, saying it would begin flying the Nelson-Auckland route on December 1 this year and Nelson-Wellington on February 1 next year.

As well as the Air New Zealand response, it prompted a flurry of mostly positive comments on the Nelson Mail's Facebook page, although a few people complained of poor experiences with Jetstar in the past.

The news was also welcomed by Nelson Tasman Chamber of Commerce chief executive Dot Kettle, who said the chamber shared and supported Jetstar's growth aspirations for the region.

"Many of our members will be delighted with this news," Kettle said.

The chamber recognised the potential in additional capacity and competition, leading to increased travel and growth of business in and out of the region, including greater options and choice around connecting to offshore markets.

"We are impressed by the Australian experience where airline competition has delivered evidence of growth," Kettle said.

Nelson Tasman Tourism is calling for as many residents as possible to join in the Jetstar celebration and have a free breakfast "on live TV".

As well as bacon butties and hot drinks, there will be quizzes, competitions and free merchandise, with the chance to win $1000 in Jetstar travel.

Start time is 6am and the organisers want people to arrive on time for the live TV crosses at 6.10 and 6.40.  The event will continue until 9am.

Meanwhile Kiwi Regional Airlines chief executive Ewan Wilson said he was pleased that Jetstar was connecting "a handful" of regional centres to Auckland and Wellington.

"But we note that still  none of the big airlines are offering region to region direct flights, like Kiwi is.

"Kiwi Regional Airlines' pledge to regional centres in our country is that we will always put their needs first when considering future routes."

The company's first aircraft was due to arrive in Hamilton from Europe today,  Wilson said.

Flights would begin on October 27 and include twice daily direct services between Dunedin and Queenstown, and four return flights a week between Dunedin and Nelson, and Nelson and Hamilton.

With Nelson-based Originair already flying Nelson-Palmerston North and set to begin a Nelson-Wellington service, and Sounds Air adding extra flights to its well-established Nelson-Wellington route, the region is set to enjoy the most competitive airline market it has ever experienced.

Origin Pacific went head-to-head with Air New Zealand on domestic routes in the early 2000s with residents and visitors benefiting from their struggle for dominance.  Tough Air New Zealand tactics eventually vanquished Origin Pacific and it collapsed in 2006 with the loss of more than 200 jobs, and $21 million in debts.

Air New Zealand is expected to take similarly hard stand against Jetstar but some commentators are noting that it will be a more even contest this time, with the newcomer being a wholly-owned subsidiary of Qantas, set up to service the budget market.

 Bill Moore

Last updated 09:34, September 1 2015

 - Stuff.co.nz

Kiwi REGIONAL Airlines - still the best bet for regional direct flights!

New Zealand-owned Kiwi Regional Airlines has restated its support for regional direct flights in the wake of Jetstar's announcement of flights connecting a handful of regional centres to Auckland and Wellington. Chief Executive Ewan Wilson said today, "We are pleased that fliers from these centres now have more choice when connecting with Auckland and Wellington, but we note that still none of the big airlines are offering region to region direct flights, like Kiwi is."

"We also feel for large regional centres like Hamilton, Invercargill, Tauranga, Rotorua and Queenstown who have missed out even on flights to the major cities."

"Kiwi Regional Airlines' pledge to regional centres in our country is that we will always put their needs first when considering future routes."

Wilson said that his company's first aircraft, which arrives tomorrow in Hamilton from Europe, includes both Hamilton and Queenstown in its first route."

"For future routes, Kiwi is already considering how we could service Invercargill, Tauranga and Rotorua, and we will talk to those cities about developing a working relationship."

Kiwi Regional Airlines flights commence on 27 October, and include twice daily direct flights between Dunedin and Queenstown, as well as four return flights weekly between Dunedin and Nelson, and Nelson and Hamilton.

Ewan Wilson CEO Kiwi Regional Airlines

Jetstar boss - this is not about revenge

He won his last fight with Air NZ, but the next round will be tougher. Grant Bradley talks to an aviation leader with high-flying goals.

Today, Jetstar New Zealand boss Grant Kerr will be in a classic car hurtling around a track near Taupo at 200km/h.

The car enthusiast this year learned to race a mate's 1967 Alfa Romeo GTV, and says it clears his mind.

"I guess it's about being able to take your headspace somewhere away from your normal working day," he says.

"You get in that car, you're doing 180-200km/h, you're not thinking about work. You're thinking about the corner you have to get around."

For Kerr, there's a lot to think about right now.

His airline is about to embark on one of the country's biggest moves in domestic aviation in a decade, taking on Air New Zealand in its regional stronghold.

He is about to announce the four new destinations - out of eight that were in the running - and gearing up his airline for major expansion, hiring as many as 100 extra staff.

Kerr - a "Kiwi with an Aussie accent" - started as Jetstar's NZ head after a bruising departure from his former employer, Air New Zealand regional subsidiary Air Nelson.

When he quit at the end of 2012, he was put on gardening leave for six months, but became embroiled in litigation when his former employer tried to push his start date at Jetstar out for the rest of the year.

It ended up in the Employment Court, where Kerr won. In conflicts of evidence, his version of events was preferred by the court and the judge praised him as "particularly impressive and patently honest". But it was a draining ordeal.

"As I look back now, it's good experience to have behind you - it's not something you'd volunteer to do every day."

So is there a tinge of revenge in taking on Air NZ in its lucrative provincial heartland? "Not at all; look, I've moved on," he says.

At a function this month he enjoyed banter with an Air New Zealand executive involved with his case.

But in leading the charge to take on Air New Zealand at its own game, he has poked a bear and the response has already been strong - the rival's lead-in fares have already plunged.

In the travel industry, Kerr is known as one of the good sorts - Air NZ chief executive Christopher Luxon describes him as a lovely guy - but he won't shy away from a tussle. He's gregarious but doesn't chase the spotlight. While warming up for an interview in a cafe near Jetstar's Auckland Airport check-in (no plush executive offices there) he frequently punctuates a sentence with a laugh.

Kerr spent his first 28 years largely in the Outback town of Cunnamulla, population 1200 or so, about 750km west of Brisbane and there's the hint of Aussie larrikin about him. His favourite film is The Castle, he likes a good red wine and despite racing in the Alfa, he's a serious Holden man. He has a 1963 EJ Holden ute (mint colour and condition) and a 1969 Holden Monaro, silver mink in colour.

While he's an adopted Kiwi, he just can't shake supporting the Wallabies.

"I feel I'm accepted in New Zealand but I do struggle from time to time with the rugby," says Kerr.

He arrived 16 years ago for what he thought was a year-long job expanding an electricity lines maintenance company from Queensland. But as a mate predicted, he found a New Zealand woman (Karen) married her and stayed.

He loves the recreation opportunities. Besides his new-found love of car racing, he's keen on mountain biking and is looking forward to a big trek into the Nelson hinterland.

The Energex lines company expansion into small New Zealand towns was a warm-up for Kerr's next moves with Jetstar. He has returned to Nelson to live, and says his rural background helps him understand the needs of places in the running for Jetstar flights.

"I come from the Outback ... so going into these areas it's great to interact with people - they're down to earth and that's me."

Kerr and three other Jetstar staff have just been around the centres bidding for regional services: Hamilton, Tauranga, Rotorua, Napier, New Plymouth, Palmerston North, Nelson and Invercargill.

He says it's been nice to feel so welcomed and he has been impressed by the energy and the diversity of the communities.

"If I had enough aircraft I'd like to go to all eight of them."

Economic potential and the ability to support two airlines are the main criteria for choosing the destinations, to be served by five 50-seater Bombardier Q300s, with the first flights planned for this year.

"For us to go into the regions, we have to know how we can bring growth. It's not about going in and taking a part of the pie that's already there."

The Jetstar executives have been welcomed in the regional towns they've visited, but flying 1.7 million people a year around New Zealand is always going to involve the odd snag. Jetstar started flying domestic routes in 2009 and was roasted for poor punctuality and other slip-ups during its early years.

But it now has a fleet of nine Airbus A320s for its domestic and short-haul international operations and has a schedule enabling it to fly on schedule 90 per cent or better.

Slip-ups happen, and Kerr says that when the airline is at fault, that's when he takes it personally.

"I don't get frustrated for myself, I get frustrated for the customer."

Last week he was holding the Jetstar hotline for Australasia, a job rostered among senior executives to deal with any major issues. It was a quiet week, his only call being a 3.30am briefing on the bombing in Bangkok.

He's now been in the Jetstar job for two years and two weeks.

"It has flown. I look back and think has it really been two years? It's been sensational."

Q&A

Career highlight? Starting Jetstar regional services.

Personal highlights? Organising a 1000km cycle ride from Brisbane to my home town of Cunnamulla to raise funds to fight cancer. A drive across the Simpson Desert in 1984, plotting my own track.

Book you're reading? Open: An Autobiography by Andre Agassi.

Favourite movie? The Aussie classic The Castle.

Dream holiday destination? To visit one of South Africa's game parks. To see the wild animals in their natural habitat would be fantastic.

Best flight? While working as a linesman flying in a small plane around the Outback, checking hundreds of kilometres of lines at power pole height.

Best advice? From a really good friend of mine - life is short, we're here for a short time, so let's enjoy it.

- NZ Herald

Jetstar's new routes, Nelson make the cut

Jetstar has announced it is adding Nelson, Napier, New Plymouth and Palmerston North to its regional destination network, starting from December.

Low fares on five routes between Nelson, Napier, New Plymouth, Palmerston North, Auckland and Wellington have also been unveiled.

Nelson-Auckland and Napier-Auckland flights would start the beginning of December, in time for the tourism season in both popular holiday destinations.

New Plymouth-Auckland, Palmerston North-Auckland and Nelson-Wellington flights will follow early next year, with services scheduled to begin from February 1 next year.

Jetstar's chief executive for Australia and New Zealand, David Hall, said the company was delivering on its commitment to bring low fares and increased competition to communities around the country, kicking off with a special $9 one-way launch fares.

"In the past several weeks our New Zealand management team has travelled to eight regional centres and received a warm welcome and very positive support in every city we've visited," Hall said in a statement.

The Qantas-owned low-cost airline said in June that it was going to expand into the regions. Cities being considered included Hamilton, Rotorua, New Plymouth, Napier, Palmerston North, Nelson and Invercargill.

After lobbying from regional mayors, airports and tourism promoters, the airline this morning announced the winners.

Economic potential and the ability to support two airlines are the main criteria for choosing the destinations, to be served by five 50-seater Bombardier Q300s, with the first flights planned for this year.

"For us to go into the regions, we have to know how we can bring growth. It's not about going in and taking a part of the pie that's already there," said Kerr.

Tourism industry says Jetstar move good for regional 'dispersal'

Tourism Industry Association chief executive Chris Roberts said Jetstar's foray would undoubtedly directly stimulate travel to the four selected destinations.

"Competition is always good and it's welcome that there's now a significant regional network as [an] alternative to Air New Zealand.

"For the first time in some time we have a significant alternative choice for consumers." The move would result in more tourists travelling to the regions "simply by the fact there'll be more seats available and more competition on prices," Roberts said.

"Tourism is on a high at the moment, it's growing very strongly and a key to future growth for New Zealand is regional dispersal - getting visitors all around the country - so any initiative that helps spread the visitors around is welcome news.

"This has significance for the international travellers as well, because for Qantas and its associated alliance airlines, they now have a regional network within New Zealand that can be included in itineraries, whereas previously they were restricted as to where they could take the visiting international traveller to - often it was only as far as Auckland and then the traveller had to switch to Air New Zealand or make other travel arrangements."

Jetstar move 'payback' says Air NZ

Air New Zealand chief executive Christopher Luxon said last week that Jetstar's entry into the regional market was partly payback for his airline's entry into Australia.

Luxon said the Jetstar regional move was more of a "macro-strategic" play.

"Qantas was quite bruised by Virgin Australia taking it on. It's a little bit of this is payback for challenging them in their home market."

Jetstar was able to access spare five Qantas group aircraft sitting on the ground and put them to use here.

The arrival of Jetstar's 50-seat Q300 aircraft in New Zealand wasn't "something we should get too freaked out about." Luxon said.

"Having said that great there is choice for customers across the country and it's great there is competition."

Other smaller airlines were also flying to towns Air New Zealand had pulled out of earlier this year (Kaitaia, Whakatane and Westport).

Luxon said Air NZ was spending $300 million upgrading its regional fleet over four years, upgrading to 68-seat ATR planes which would give it cost advantages over Jetstar.

"I feel really comfortable with our ability to compete there. We need to keep it (the Jetstar regional service) in perspective I think it's been a bit overblown to be honest with you."

Regional mayors welcome Jetstar's arrival

Hawke's Bay Tourism general manager Annie Dundas said the decision was "huge news" for the region.

"It's a complete game-changer for tourism growth opportunities. Competitive airfares are good for domestic tourism but this will also open up international connections to Australia too."

The mayors of Napier and Hastings said the result was the ultimate reward for the regional team behind the pitch.

"This is simply wonderful," said Napier Mayor Bill Dalton. "The team worked hard and showed Jetstar we are a region on the up with plenty of untapped potential."

Hastings Mayor Lawrence Yule said it was a long-awaited prize.

"The only way to substantially reduce the price of airfares for the people of Hawkes Bay is by competition. It is very exciting that we have landed a large player."

Business Hawke's Bay chief executive Susan White welcomed a second "sustainable carrier" servicing the region.

"We are convinced this will contribute to the growth of our regional economy and we look forward to the expansion of routes over time."

With expansion plans already underway, Hawke's Bay Airport chief executive Nick Story said the timing couldn't be better. "It's a very exciting day for the airport company and a great day for the Hawkes Bay region."

- Additional reporting: Brendan Manning, Hawkes Bay Today

- NZ Herald

Jetstar to fly Nelson

Jetstar's website has crashed under heavy demand for its $9 special fares on new routes to Nelson, Napier, Palmerston North and New Plymouth announced on Monday morning.

A four-hour special was being run on Monday, with fares beginning at $9. Normal fares would start between $45 and $49.

Jetstar's website appeared to be struggling to handle the volume of traffic from visitors checking out its new services, returning blank pages or loading slowly.

Jetstar New Zealand boss Grant Kerr said it was "fantastic" the site had crashed, because it showed how much interest there was.

Staff were working to fix the problem and Jetstar would consider extending the four-hour special window.

As people vented their frustration on social media, spokesman Phil Boeyen  said the problems appeared to be simply due to the volume of traffic to the site.

"It is great to know that it is that popular," he said.

All routes will fly between the regions and Auckland, with the Nelson flights also going to Wellington. All rates were now on sale, and the first flights - from Nelson and Napier to Auckland - will begin in December.

The low-cost airline chose the destinations from a longlist of Hamilton, Rotorua, Tauranga, New Plymouth, Napier, Palmerston North, Nelson and Invercargill.

Nelson was the big winner as it was the only centre with two destinations - Wellington and Auckland.

Nelson Mayor Rachel Reese said she had kept the announcement secret for 36 hours.

"You can hear the people cheering from Trafalgar St," she told the crowd at Wellington Airport.

Wellington Mayor Celia Wade-Brown said the news meant there was now more reason to extend Wellington's runway.

It meant people from the top of the South Island now had more opportunity to fly to Wellington then elsewhere overseas. A longer runway would mean more options, she said.

Nelson MP Nick Smith said it was "fantastic news" for Nelson, an isolated region that depended on the strengths of its links with other parts of New Zealand.

"Studies show that on average air fares are 30 per cent less where there is effective competition and that amounts to millions of dollars of savings and thousands more visitors to Nelson."

Smith said the Jetstar link was important to the visitor industry, but the biggest gain for Nelson was making nationwide businesses viable in Nelson and for people to be able to easily connect across the country through more competitive air services.

​"With house prices going through the roof in Auckland there is an opportunity for us to attract businesses to our region."

He was "pretty loyal" to Air New Zealand, a good company that deserved credit for its substantial investment in maintenance services in Nelson.

"But I still believe the region's overall benefit is in having a choice of services," ​Smith said.

Nelson Tasman Tourism chief executive Lynda Keene said the increased competition was "really great news" for Nelson and Tasman residents.

"Grandparents who might go to Dunedin, Auckland or Christchurch once a year might be able to travel three or four times a year. It's definitely going to open up a lot more opportunities."

It was also really exciting from a business perspective, she said.

"We're really fortunate to have a lot of frequency with Air New Zealand which has been a wonderful contributor to the region, but Jetstar coming in is going to make it a bit easier for people coming out of Auckland, Wellington or Christchurch, particularly for trans-Tasman services."

It would also make international travel more accessible through Jetstar's links with Emirates.

With Originair and Kiwi  Regional Airlines joining the regional competition, "it's raining planes", Keene said.

Palmerston North mayor Grant Smith said the announcement was welcome for the city and the region.

"It's only good news," he said.

"The region will get lower fares and it will also help people who otherwise couldn't travel.

"There is choice there for them," he said.

Smith expected the move to give tourism in the region a boost and help retailers and agribusiness as well.

"It will bring more travellers to the region," he said.

"Attractions like the [Manawatu] Gorge and the Tui brewery will become more accessible."

New Plymouth Mayor Andrew Judd said Jetstar's decision was great news for the people of in the region.

"Having both Air New Zealand and Jetstar operating out of New Plymouth will give passengers more choice and more opportunity to afford to fly, and give visitors even more reasons to come here," Judd said.

The New Plymouth District Council was already planning extensions at the airport's terminal, runway apron and public car park, with construction due to start in May next year.

Some disappointment

Some southern leaders were disappointed Invercargill was not a new destination.

Southland District Mayor Gary Tong said he was not involved in the consultation with Jetstar, and it was disappointing they had chosen not to come.

But he was hopeful Jetstar would consider Invercargill again.

"There are certainly the numbers [of people] coming south."

Venture Southland chief executive Paul Casson said although it was disappointing, other airlines might be interested.

"Visitor numbers look good for the next few months... there may be other airlines who want to fly into our region."

Jetstar had made a commercial decision to support smaller regions than Southland, he said.

"Luckily we've got Air New Zealand, and they're very good to us, which we've seen last week in a reduction of fares."

'Very competitive process'

Economic Development Minister Steven Joyce and Transport Minister Simon Bridges welcomed increased competition in the regional aviation market.

Transport linkages are crucial for regional development and these new air linkages will help boost business and tourism traffic into regions like Taranaki, Hawke's Bay, Nelson and Manawatu/Whanganui," Joyce said.

"I know it's been a very competitive process between the different regions for the opportunity to host the new carrier. I'm confident that this expansion of regional routes will be successful and lead to more competition on regional routes in the future," he said.

The first of Jetstar's fleet of five regional 50-seat Bombardier Q300 aircraft to service the routes arrived in Wellington over the weekend.

Jetstar will face stiff competition from national airline Air New Zealand, which announced last week that it will slash two million flights to below $100 over the next year.

The announcement came as Air New Zealand celebrated record profits of $327 million in the year to June 30.

Air NZ chief executive Christopher Luxon said lower fuel prices and more seats would drive down costs for fliers.

House of Travel commercial planning director Brent Thomas said competition from Jetstar also played a part.

"The competitive landscape of airlines means the lower cost gets passed through to consumers relatively quickly once the hedging comes off, " he said.

 - Stuff

TOM HUNT, GREER BERRY, BILL MOORE AND BLANTON SMITH

Last updated 10:37, August 31 2015

Jetstar to fly Nelson, Napier, New Plymouth and Palmerston North

Media Release Jetstar announces low fares to four new regional destinations, five routes

• Flights on sale now to Nelson, Napier, New Plymouth and Palmerston North
• Launch sale fares start from $9^ one-wayJetstar today unveiled its new regional network in New Zealand, launching low fares on five routes between Nelson, Napier, New Plymouth, Palmerston North, Auckland and Wellington.Nelson-Auckland and Napier-Auckland flights will take off from the beginning of December, in time for the busy tourism season in both popular holiday destinations.New Plymouth-Auckland, Palmerston North-Auckland and Nelson-Wellington flights will follow early next year, with services scheduled to begin from 1 February 2016.David Hall, CEO Jetstar Australia and New Zealand, made the announcement this morning in Wellington, joined by Economic Development Minister Steven Joyce and Transport Minister Simon Bridges.“Today we’re delivering on our commitment to bring low fares and increased competition to communities around the country,” said Mr HallTo celebrate the new routes Jetstar is offering special $9 one-way regional launch fares from 9.30am-1.30pm today for travel 1-15 December 2015, 2 February-21 March 2016 and 4 May-29 Jun 2016.

Corporate Communications Manager, New Zealand

JETSTAR

Kiwi takes flight

The 34-seat aircraft has been extensively refitted and repainted in Poland and the Czech Republic over the last month as part of the purchase arrangements to meet Kiwi's requirements, and is expected to touch down at Hamilton International Airport on Tuesday afternoon, 1st September. The delivery route for the aircraft is via Oman, Sri Lanka, Western Australia and New South Wales.

Kiwi's General Manager Airline Operations, Bill Wilson, said he was "very pleased that we've passed this significant milestone, and we are really looking forward to seeing our own aircraft sitting on the tarmac in our own country."

"We acknowledge the important role the NZCAA has played in achieving the export of this aircraft in a timely and safe manner".

Kiwi Regional Airlines opened bookings two weeks ago for its scheduled flights, commencing on 27th October.

The aircraft will fly seven days a week, initially connecting the regional centres of Dunedin, Nelson, Queenstown and Hamilton.

Bill Wilson

General Manager Airline Operations

Kiwi Regional Airlines

Plans for more regional routes promise boost in passenger options, says Littlewood.

Auckland Airport chief executive Adrian Littlewood says the arrival of Jetstar on to regional routes will be a welcome boost for his company and passengers nationwide.

Although not a big part of the airport's total business, more regional flying by Jetstar will be an "interesting" feature of aviation.

Jetstar will announce next month up to four destinations it will fly in the regions and Auckland Airport is likely to be part of the new network for the Q300 Bombardier planes.

Air New Zealand has added new planes to its network after pulling out of three towns and has dropped lead-in fares sharply.

Littlewood said Jetstar's regional network would feed into its international network, which includes parent company Qantas and group partner Emirates. "I do think that's a big part of the story of how airlines work in alliances they form."

Jetstar would be able to give international tourists more options to go to other places.

"To have Jetstar and their alliance partners having onward services not just on the jet routes but also on the regional routes will make quite a difference. I'm interested in how that is going to play out," said Littlewood.

Jetstar is not saying where it will fly, with Hamilton, Tauranga, Rotorua, Napier, New Plymouth, Palmerston North, Nelson and Invercargill in the running. Napier and Nelson are seen as frontrunners.

Littlewood said the airport was allocating more stands for turbo props serving the regions, which would benefit from healthy tourism growth. The airport on Monday released its full-year profit to June 30 in which underlying profit, which excludes some revaluations of property and derivatives, rose to $176.4 million, from $169.9 million a year earlier. Sales rose 6.9 per cent to $508.5 million. Underlying earnings per share were up 12.9 per cent to 14.82c a share.

Income rose 6.5 per cent to $93.3 million and the company also recorded increases in rental income.

Underlying annual earnings may rise as much as 8.3 per cent next year to $191 million.

Littlewood expanded on a review of "direction and strategy, including executive remuneration" which had led to the exit of chief financial officer Simon Robertson and general manager corporate affairs Charles Spillane.

"The review resulted in some changes in the long-term incentive scheme." The company was hiring fulltime replacements for the pair.

Where revenue's coming from

• Total revenue up 6.9% to $508.5 million in the year to June 30. • Aeronautical revenue landing and passenger charges up by 6.9% to $234.2 million). • Property rentals up by 8.9% to $64.6 million. • Profit share from Queenstown Airport up 25.8% to $2.1 million. • Profit share from North Queensland Airports down 9.8% to $7.2 million, reflecting a softening Australian economy. • Profit from Novotel hotel up by 68.4% to $3.2 million.

- NZ Herald

by Grant Bradley

Cheaper airfares as competition grows

Kiwi Regional Airlines has announced cheaper regional fares as Nelson skies grow steadily more crowded with competition.

Kiwi Regional announced their direct flights between regions will start from $79 from October 28 to the end of January with the exception of two weeks leading up to Christmas day. The fares are part of a 'celebration airfare special'.

Passengers on the Dunedin-Nelson, Nelson-Dunedin, Hamilton-Nelson and Nelson-Hamilton routes will be able to purchase the $79 flights on any day or time in the schedule. The price is generally much lower than Air New Zealand's current prices.

A standard fare on October 28 from Nelson to Dunedin on Air New Zealand (flying via Christchurch) is currently priced at $138. Kiwi Regional Airlines is offering the flight direct on the same date for $79.

Kiwi Regional chief executive Ewan Wilson said the cheaper fares were not to compete with Air New Zealand, rather, it was to celebrate the purchase and completion of painting its new aircraft.

"It is about celebrating a key milestone in our company's development," said Wilson.

The airline is also providing connecting flights between Nelson and Queenstown through Dunedin. These will be priced at $119 for the sale period.

"Even on the busy days of the week, or times of the day, if you are quick enough you will be able to get a seat for $79. And our other, more flexible fares, also represent a good deal for the region to region traveller," he said.

The cheaper fares come as additional airlines take to Nelson skies, including Originair who started flying between Nelson and Palmerston North this month.

Jetstar is also expected to announce if Nelson will be one of their regional destinations in September with flights commencing in December.

JESS PULLAR

Last updated 08:54, August 26 2015

Stuff

Air New Zealand to grow domestic operation, offer more cheap flights

Air New Zealand announced a record result of 496 million dollars for the 2015 financial year. Customers are set to get a good deal on flights over the next year, Air New Zealand says.

As the airline announced a record annual profit on Tuesday, chief executive Christopher Luxon said lower fuel prices and growing capacity would lead to cheaper flights for Air New Zealand travellers.

The airline would offer over two million domestic fares for less than $100.

Air NZ, which announced cuts to its regional routes last year, also said it expected to grow its domestic operation by 8 per cent this year.

Competition with Jetstar is hotting up, and the regional route expansion by the Qantas offshoot has been tipped eat into Air New Zealand's revenue.

Jetstar was planning to begin regional flights on turboprops from December, and will offer Qantas frequent flyer points on its domestic NZ network, which it does not do in Australia, to help to drive loyalty.

Luxon welcomed Jetstar's plans to add four new domestic New Zealand destinations to its network, and downplayed the impact it could have on competitors.

"We are confident of our ability to stimulate the economy to fill those seats. We don't lose to Australians at home."

New Zealand's international airfares were down 6.3 per cent year-on-year and domestic flight prices were down 3 per cent, Statistics New Zealand data shows.

Membership of Air New Zealand's loyalty programme, Airpoints, was up 17 per cent at 1.9 million, with Australia the biggest overseas group of members, up 20 per cent in th year, Luxon said.

Luxon said Air New Zealand was focused on the Pacific Rim to provide growth. The airline was starting new routes this December to Houston and Buenos Aires.

There was already strong demand for those destinations, and Luxon said were also more opportunities in Australia, Asia and the Americas.

Australia seemed underserved and there was potential to bring more Australian travellers through Auckland to Latin American destinations, he said.

Bullish outlook

The national carrier posted an annual profit of $327 million, up 24 per cent, and said strong demand and capacity growth, cost control and lower fuel prices were behind its record result.

Luxon was confident of the airline being able to shake off the effects of a Chinese economic slowdown and a drop in the New Zealand dollar.

He said the airline's experience of previous market slowdowns, including in Asia, was that big segments of the market were not affected by macroeconomic changes. American travellers had continued to travel to New Zealand through the global financial crisis, he said.

New Zealand's dollar is on a downward track and the profit included a negative currency impact of $31m. Luxon said Air New Zealand was also expecting an $80m currency drag on next year's profit.

But he said the airline had been able to use currency hedging – a type of insurance against fluctuations in the dollar – to lessen the impact of the drop.

Chairman Tony Carter said the airline expected significant earnings growth in the coming year in part thanks to increased capacity and a more efficient operation.

"Our strategic initiatives over the past three years have positioned us well to take advantage of market dynamics which have contributed to these results," Carter said.

"Our investment in new efficient aircraft, the continued development of our alliance partner relationships, world class sales and marketing execution, great customer service and strong focus on cost management have enabled Air New Zealand to achieve revenue growth against a stable cost base.

"We indicated at our interim result that lower fuel prices and current sales momentum have strengthened the company's outlook, and this has seen the delivery of a record annual result that our shareholders and staff can be immensely proud of," he said.

A company bonus scheme will see 8000 staff who are not on other incentive programmes receive payments of up to $1400 thanks to the result, Luxon said.

The final dividend of 9.5 cents per share was up 73 per cent on the previous year, bringing the total dividend to 16c per share, an increase of 60 per cent.

SUSAN EDMUNDS

Last updated 10:18, August 26 2015

 - Stuff

Air New Zealand slashes fares ahead of Jetstar arrival

Air New Zealand has fired some heavy shots in what's shaping up as an intense regional air fare war. Figures show the airline slashed lead-in fares earlier this month just as Jetstar prepares to enter the market.

Air New Zealand has had a stranglehold on the regional aviation market for years and lead-in fares have dropped by up to 40 per cent on dozens of routes ahead of Jetstar's announcement next month of where it will fly.

Eight destinations are being considered by Jetstar for the initial launch phase: Hamilton, Rotorua, Tauranga, New Plymouth, Napier, Palmerston North, Nelson and Invercargill, with the first flights due to take off in December.

Grant Kerr, Jetstar head of New Zealand said the Air New Zealand response to his airline's planned services showed what competition brought to air travellers.

"We're delighted to see that without even announcing destinations or publishing a schedule, Jetstar is already making regional travel much more affordable," Kerr said.

The figures show reductions on 32 regional routes earlier this month ranging from 11 per cent to 40 per cent. They are nearly all the lowest introductory fares.

Air New Zealand's chief sales and commercial officer Cam Wallace said his airline had said earlier this year - before Jetstar announced its plans - that it would cut prices.

"We are now seeing this play out," Wallace said.

Air New Zealand was not undercutting fares to target Jetstar routes as many were to towns not on its list of possible destinations.

"We have delivered reduced lead-in fares to every domestic port we operate over the past six months or so. The biggest reductions have been on routes that are being up-gauged from the 19-seat Beech aircraft to the larger 50-seat Q300s."

Wallace said that to fill the extra seats his airline had cut fares on 600,000 seats to below $100 on the regional network.

The number of cheap fares was likely to grow by at least another 30 per cent.

While analysts say Jetstar will have to fight hard to make its regional services pay, the entry of the Qantas subsidiary will hurt Air New Zealand's bottom line as well as it offers more discount fares to shore up its market.

Frontrunners for Jetstar regional services are believed to include Napier, New Plymouth, Palmerston North and Nelson. It hasn't said what its fares may be but has said where it enters markets fares can drop by up to 40 per cent.

Wallace said Air New Zealand was already competing with other small airlines on some routes and initiatives have been in the pipeline for the past 18 months.

A board member of Business Hawkes Bay, Mike Purchas, said travellers in the regions were relishing competition.

"We would welcome a second carrier to Hawkes Bay, any region where there is a monopoly inevitably means there are higher fares." He wasn't surprised Air New Zealand was vigorously protecting its patch by dropping fares.

"It's not a charity."

House of Travel commercial director Brent Thomas said spending reports from corporate clients showed the prospect of competition was already being seen.

"We have seen a material movement in pricing," Thomas said.

"There may have been a significant reduction [in] the lead-in price but what we don't know is the quantity they've got selling at that price."

By Grant Bradley