Virgin Australia reduces trans-Tasman services out of Auckland and Chirstchurch


Virgin Australia is the latest airline to adjust its New Zealand business as the aviation industry faces increasing headwinds.

A Virgin Australia spokeswoman said it was reducing trans-Tasman services to Auckland and Christchurch to align with changing demand.

The Auckland-Sydney schedule will reduce from 18 to 15 return services per week from late July to late September. Flights will increase outside of those times, but may fluctuate depending on demand, she said.

Virgin said its Sydney-Christchurch service was also changing to a seasonal service, operating during the peak season only, from late September to late April.

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The reductions come a year after Air New Zealand pulled the pin on an eight year alliance with the Australian carrier and went on to partner with Qantas instead.

The spokeswoman said Virgin was committed to the trans-Tasman market and would continue to operate 200 services per week between Australia and New Zealand between July to September.

On all trans-Tasman flights Virgin operates Boeing 737-800 fitted with business class and economy and all fares are inclusive of 23 kilograms checked baggage plus a meal.

Virgin Australia operates Boeing 737-800 on all its trans-Tasman routes.

SUPPLIED

Virgin Australia operates Boeing 737-800 on all its trans-Tasman routes.

Virgin Australia offers flights from Australia to Auckland, Christchurch, Dunedin, Queenstown and Wellington.

Auckland Airport’s monthly traffic update from February shows arrivals from Australia are flat at 872,000 for the year to February.

Aviation consultant Irene King said Virgin’s reduction in services reflected a general downturn in the aviation industry, exacerbated by rising fuel prices.

“The golden era of great profits for airlines has turned,” King said.

Virgin Australia's 737-800s feature eight business class seats. Business and premium leisure customers are a key market for Virgin.

VIRGIN AUSTRALIA

Virgin Australia’s 737-800s feature eight business class seats. Business and premium leisure customers are a key market for Virgin.

In May Hong Kong Airlines stopped flying between Hong Kong and Auckland and in February Air Asia X stopped flying Auckland to Kuala Lumpur via Gold Coast.

Tourism was “softening significantly” and fuel prices were projected to continue increasing, she said.

“With that combination airlines have to really start addressing their costs.”

Virgin was not as well resourced as competitors Air New Zealand and Qantas and a slowing Australian economy and more Australians holidaying at home would be affecting the airline, she said.

“Virgin has got less money in the kitty to really withstand some of the cyclical downturns.”

But all airlines were facing headwinds and tweaking their networks, withdrawing services and reigning in costs as a result, she said.

“You’re going to see airlines pulling back all over the place in Australasia.”

Virgin would also be feeling the pinch of having less economical aircraft to its competitors on the Tasman, she said.

Air New Zealand operates modern A321neo on the Tasman, which carry up to 214 passengers, 48 more than Virgin’s 737s. They are also more economical to fly.

Air New Zealand's new A321neo aircraft are expected to deliver fuel savings and efficiencies of about 15 per cent.

CHRIS SKELTON/STUFF

Air New Zealand’s new A321neo aircraft are expected to deliver fuel savings and efficiencies of about 15 per cent.

Virgin Australia had 48 Boeing 737 MAX aircraft on order but deferred the delivery from November to 2021 in the wake of ongoing uncertainty around the malfunctioning aircraft type and as the airline looks to improve its own financial position.

Shortly after Air New Zealand walked away from its Virgin Australia codeshare agreement Virgin Australia’s group executive Rob Sharp told the Centre for Aviation (Capa) the end of the codeshare would result in a drop in competition in New Zealand.

This was because Qantas and Air New Zealand – the two main airlines servicing New Zealand – would be codesharing on each other’s domestic product under the arrangement.

He said Virgin would be the “challenger brand” in New Zealand, with a focus on attracting premium leisure and business travellers.

A big focus was increasing frequency to Auckland from Australia’s east coast, he said.

Budget airline Tiger, a subsidiary of Virgin Australia, was an option to bring across to New Zealand, he said at the time.

“It is not too far down the track an option for us to be able to bring Tiger into the market.”

Sharp said at the time Virgin Australia would undergo a “network shake up” in New Zealand, including adding two new routes – Dunedin and Queenstown.

Virgin’s changes come not long after Air New Zealand made sweeping changes to its business following a profit downgrade in January for the 2019 financial year from $425 million to $525m to a revised forecast of $340m to $400m.

Following a three month review it announced a raft of changes to its operations including deferring $750m in aircraft capital spending, and $50m of deferred spending elsewhere.

At the same time Air New Zealand announced it would start flying Auckland to Seoul and increase frequency on its Taipei and Chicago routes during the peak season.

On Monday Air New Zealand chief executive Christopher Luxon told staff the executive team had voluntarily frozen their salaries for at least the next 12 months as the company looks to reduce overhead costs by about 5 per cent.

Increases in fuel price would result in about $200m additional costs for Air New Zealand this year compared to last year and this was expected to continue into next year, he said.



Source link Business News Australia

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