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Jetstar announces end to regional New Zealand operations

October 1, 2019

Earlier this month, Jetstar announced plans to halt its turboprop services in New Zealand citing continued losses and weak outlook in the market. When the services were first launched in 2015, they were heralded by the market, due in large part to the fact they represented a substantial shift in Jetstar’s operating model; it was the first time Jetstar had turboprops operating under their banner. The approach certainly fit the definition of “innovation” as far as network planning is concerned and breathed new life into regional New Zealand aviation.

 

Jetstar’s five strong fleet of Q300 aircraft were based in Auckland and operated to five destinations in the North and South Island. The route map below illustrates this further.

 

 

The impacts of this announcement are not proportional across all stakeholders. For large airports such as Wellington and Auckland, the volume of traffic carried by these services relative to their overall traffic base would be minimal. Conversely, the regional ports will see much more tangible impacts to their passenger and revenue base. Discussions with some of the affected airports in New Zealand indicates that 10-15% of their market is handled by the airline on these services.

 

Whether the vacuum left in the market gets filled remains to be seen at this stage. There are several regional players that could step-in however their limited network reach may hinder their ability to completely recoup passenger numbers. Air New Zealand may also be an option although they likely do not have the aircraft in their fleet to operate the routes on the same scale at this stage. To that end however, given Jetstar pulled the services because they were loss making, it does seem improbable that another airline would immediately come in and take their place. Less competition in this sector will inevitably mean higher average fares on the back on less capacity in the market. Residents, visitors, and ultimately the local economies of these regions will be directly affected in the short-term.

 

At the time of writing, it remains to be seen what the Qantas Group will do with these aircraft. It is suspected they will be retired from their fleet.

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