South Pacific Aviation Outlook 2018

Qantas embarks on a "transition year" for international; Air New Zealand returns another strong 1H profit as the South Pacific enjoys benign conditions.

AN OPTIMISTIC OUTLOOK pervades the direction of the two main airlines in the South Pacific region, Qantas and Air New Zealand. Following a record first half profit from Qantas and an expectation of a best ever full year result for Air New Zealand, all appears rosy in the South Pacific. Despite that, it remains an intensely competitive market, especially internationally.
Virgin Australia is meanwhile bedding down its Tigerair dual brand operation. After shedding its group executive - and apparent heir to the CEO role - John Thomas in Jun-2017, Tigerair CEO Rob Sharp was appointed to head the international and domestic operations, while longstanding group executive John Borghetti remains in his role.
The highly lucrative domestic Australian market is experiencing "continued capacity discipline", delivering substantial profitability - at least to the Qantas Group, which incorporates Jetstar. In the domestic market the group enjoyed a record half year EBIT of AUD1063 million (USD828.2 million) for the six months to 31-Dec-2017, up 12.0% on the previous period. Of that domestic accounted for AUD659 million (USD519 million), while international contributed a mere AUD220 million (USD173 million), down 5.5%. The Jetstar Group showed an AUD318 million (USD248 million) profit, up 15.6% year-on-year and, to illustrate the holistic nature of the group, Qantas Loyalty made a profit of AUD184 million (USD143 million), up 1.7%.