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Reaction to Pacific Blue's suspension of New Zealand operations

16-Aug-2010 3:23 PM

Virgin Blue CEO, John Borghetti, stated the group’s move to suspend Pacific Blue’s domestic New Zealand operations was due to the market being too small for three carriers and there was “no prospect of this route turning into profit” (The Australian, 17-Aug-2010).

  • Auckland Airport noted (16-Aug-2010), with some disappointment, the planned withdrawal of Pacific Blue from the New Zealand domestic aviation market in Oct-2010, but is confident that the ongoing strong growth of the domestic travel market will ensure future customer demand continues to be met. For FY2010, revenue from Pacific Blue’s domestic travel operations is expected to represent around 1.3% (approximately NZD2 million) of Auckland Airport’s total aeronautical revenue. [more]
  • Wellington Airport expressed (16-Aug-2010) disappointment at Pacific Blue's announcement that it will cease domestic services. The carrier currently operates 21 times weekly Wellington-Auckland service and 14 times weekly Wellington-Christchurch services, which account for approximately 12% of Wellington’s air traffic on these routes. Wellington Airport also welcomed Jetstar's announcement that it will introduce two A320 aircraft into the New Zealand market by early 2011; [more]
  • Jetstar Group CEO, Bruce Buchanan, stated the Virgin Blue Group had always planned to convert its Fiji route to B737 operations and only initially introduced V Australia B777 premium services to win capacity for the route (The Australian, 17-Aug-2010). Virgin Blue plans to replace the V Australia services with Pacific Blue operations;
  • Engineering, Printing and Manufacturing Union (EPMU) stated the suspension of Pacific Blue’s domestic New Zealand operations will result in the loss of up to 200 jobs, not create 100 new ones as the carrier claims (NZPA, 17-Aug-2010). The airline employs approximately 450 New Zealand staff at its crew bases in Auckland and Christchurch and its Christchurch head office. EMPU added Pacific Blue is also dependent on other service providers and suppliers, which will now be forced to scale back operations due to the loss of work;
  • House of Travel, a New Zealand travel agency, claims there will now be fewer cheap fares in the domestic market with the withdrawal of the airline (NZ Herald, 16-Aug-2010). The agency stated the airline was a “very big seller”.

Auckland Airport: “Assuming that no other airline picks up this capacity, which we think is quite unlikely, the impact on Auckland Airport will be relatively small. While the departure of these domestic services will have some financial impact, we also believe that there is enough travel demand and growth potential in the domestic market to provide other airlines with a strong business case for taking up the capacity on the main domestic trunk routes left behind by Pacific Blue,” Simon Moutter, CEO. Source: Auckland Airport, 16-Aug-2010.