Air New Zealand’s trans Tasman collaboration with Virgin Australia is “where we want it to be”, the Kiwi carrier’s second in command has said, although challenges remain on the route.
Deputy chief executive Norm Thompson claimed its Tasman market share ex-Australia has climbed with high load factors helping push the route into the black.
But the strong dollar is continuing to impact Tasman business with Australians “in love” with the US dollar exchange rate, he told Travel Today.
“The alliance is working particularly well, we work well together as a joint venture in both marketing and product offering,” Thompson said. “We have seen a nice lift in business, ex-Australia particularly, and where the market has grown the alliance has pretty much taken that growth so we are happy with the way it is working.”
Market share from Australia has risen “a couple of percentage points” to around the mid 30s, he said.
“We think we’ve pretty much got the alliance where we want it to be, certainly the customer is now very familiar with our Seats to Suit product and we’ve both worked hard to achieve a greater commonality of product,” Thompson said. “We think we have the product right and we think we have the frequency right but we can’t afford to rest on our laurels.”
Around 40% of bookings have been for Air NZ’s seat only with carry on bag option, far higher than the high 20s expected, he explained.
“The price point has been a factor in growing the market,” Thompson said. “Previously we had loads in the 70s but are now consistently in the 80s which is where it needs to be if you are operating at the sorts of yields across the Tasman. If we haven’t got load factors in the 80s we’ll look at ourselves and wonder what the hell happened.”
Critically the Tasman is now poised to make money – a far cry from the days when it was “haemorrhaging cash”, as one senior executive told Travel Today.
“Last year it was heading towards break even and we’re a little better than that now. It’s coming out on the right side of the ledger although it’s not yet where we want it to be,” Thompson said.
“The real challenge in the Australian market is competing against the US dollar,” he continued. “Australians seem to be in love with the attractiveness of the US dollar and let’s be fair, it is good value. So I think we’ve probably lost some potential market because of that. We’ve worked hard to keep our numbers up and we have to ensure we position New Zealand as a value for money destination.”
Thompson said sales for the alliance’s newest route, Auckland to the Sunshine Coast which starts on July 1, had been strong but he played down any further route developments.
