Newcomer Tiger could help Air NZ

By ROELAND van den BERGH – The Dominion Post

Air New Zealand is likely to get a short reprieve from increased competition as a result of Tiger Air’s entering the Australian market, analysts say.

Tiger Air announced last week that it would be based in Melbourne and could start flying within months. The Singapore Airlines-backed budget carrier is expected to fly between Australia’s main eastern centres, and to elicit a strong response from incumbents Qantas and Virgin Blue.

Air New Zealand must be “absolutely delighted” about Tiger’s move, which would distract Qantas and Virgin Blue from expanding internationally, the Centre for Asia Pacific Aviation’s managing director, Peter Harbison, said.

“Qantas was probably gearing up to hit Air New Zealand fairly hard domestically and maybe even on the Tasman,” Mr Harbison said.

Air New Zealand domestic profits were “starting to look too good” for Qantas to ignore.

But with Qantas announcing it would add 20 per cent capacity to its Australian domestic network in the next year in response to Tiger, it would not have the planes available to take on Air New Zealand.

“They are gearing up for a pretty vicious response,” Mr Harbison said.

Forsyth Barr head of research Rob Mercer said Tiger’s move meant Qantas management would focus on protecting the domestic business. Tiger’s move would also put Virgin Blue’s aspirations for New Zealand domestic services on hold, with its new Embraer regional jets needed to free up capacity on its Boeing 737 fleet.

But Air New Zealand could find itself under intense attack once the Australian combatants sorted themselves out.

Tiger was likely to cross the Tasman eventually and could even eye the domestic market, Mr Harbison said.

Proposed domestic airline Kiwijet also wants to take advantage of the competitive developments in Australia by offering to buy Qantas’ New Zealand domestic operation Jetconnect for $27 million.

Kiwijet chief executive Patrick Weil said Qantas would be looking to quit New Zealand and return its Boeing 737s to Australia for the fight with Tiger.

Jetconnect would provide Kiwijet with an air-operating certificate and staff to begin services in December, using two Boeing 737-300s of its own to fly between Auckland, Christchurch, Dunedin and Invercargill.

Yesterday Kiwijet said it would put an acquisition proposal to Qantas on June 1, with the claimed backing of three investors from the United States and Japan.

Both analysts doubted that Qantas would sell Jetconnect.

Mr Mercer said Qantas’ best chance of taking on Air New Zealand would be to become a much stronger second airline, using its budget trans-Tasman arm, Jetstar.

Jetstar chief executive Alan Joyce said last month it was only a matter of time before Jetstar flew New Zealand routes.

Mr Harbison queried Mr Weil’s strategy of talking about buying Jetconnect before making an offer, because it would increase the price.