[Anonymous]

[VintageKrug]

Nice to see this “soon to be globalised airline” building on its expansion plans and expanding services…oh, er…wait a minute, their actually reducing services. Oops:

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Pacific Blue is to exit its New Zealand domestic operations as part of a wider review of its network.

The airline will also boost trans-Tasman services and generally increase its Australian services to South East Asia and the Pacific Islands.

Virgin Blue Group of Airlines chief executive John Borghetti said the ongoing network review was aimed at delivering increased competition and capturing growth opportunities.

“As we enter a new era for Virgin Blue it is vital that we have the right aircraft on the right routes if we are to fully exploit our competitive advantages in the context of the Group’s three core business: domestic short haul, international medium haul and international long haul.

“We are adding capacity to routes with strong revenue potential and accordingly, removing capacity from services which are underperforming,” he said.

Pacific Blue will cease flying New Zealand domestic routes and redeploy two Boeing 737-800 New Zealand-based aircraft on to trans-Tasman and medium haul international routes. These aircraft have 180 seats.

The New Zealand domestic network includes Christchurch, Dunedin, Queenstown and Auckland with 106 flights a week, including twice daily services from Christchurch to Wellington and Christchurch to Auckland.

“Guests holding forward bookings on New Zealand domestic routes from 18 October onward will be provided with re-accommodation and refund options,” Borghetti said.

Growing capacity on trans-Tasman routes was a positive step that would see an increase in New Zealand-based staff, he said.

Pacific Blue currently employs around 450 New Zealanders at crew bases in Christchurch and Auckland and its head office in Christchurch and the increase in international flying means up to 100 new jobs would be created.

Virgin Blue is the 100 per cent owner of Pacific Blue, and in turn is owned by major shareholder of Virgin Group, co-founder CEO Brett Godfrey, Virgin Blue staff and other shareholders. Founder Richard Branson is president of Virgin Blue.

[EU_Flyer]

VK….. this is actually a good move. The New Zealand domestic market is saturated with Air New Zealand and Jetstar (having inherited Qantas’ former network) on the scene for years. A country with a population of only a few million cannot support 3 domestic airlines. Pacific Blue’s entry into New Zealand was initially an attempt to bring LCC competition to the Qantas/Air New Zealand full service products that had existed for years. Following the Qantas Group’s replacement of QFNZ with Jetstar and Air New Zealand adopting a LCC model on domestic routes, suddenly Pacific Blue couldn’t differentiate or indeed compete, especially where it lacked membership of a global alliance or a vast international network out of NZ from which it could generate through traffic from.

John Borghetti is ex Qantas and the mish mash of product offered by VB presently is unattractive to the corporate market which Borghetti wants to further attract. As such, I see the Virgin Blue group of airlines eventually consolidating under one brand (probably V Australia) and eventually morphing into a lower cost version of Qantas, both domestically in Australia and internationally clicking into the existing Virgin networks in the UK and US.

[ScottWilson]

I see V Australia, Virgin Blue, Pacific Blue eventually either taking over or being taken over by Air NZ. Air NZ’s only serious hope for growth is to be a significant player in the Australian market. Qantas has twiced used government intervention to halt this (first by lobbying to stop the open skies agreement between Australia and NZ in the early 90s, secondly by lobbying to hinder Singapore Airlines gaining a substantial stake in Air NZ/Ansett for sufficiently long so that the whole thing went under).

A report some years ago suggested the NZ domestic market was big enough for 1.5 airlines, NZ is the one and the half is JQ using it as a feeder to the JQ/QF network (the reason QF entered the market in the first place).

[EU_Flyer]

Good point ScottWilson.

I doubt ANZ would (or should) take over anything after the Ansett debacle.

There could be significant synergies achieved with a DJ NZ merger, however I can’t see either giving up their individual brands.

[MarcusUK]

Strange mathematics to “reduce services” when 100 new jobs are to be created, & expansion of the Tasman routes are to be made!
Comments are best made by those that have some idea of the region & actually been there…

This move was discussed & announced by Virgin Blue, when the new CEO was appointed earlier this year. The website posted that “An agreement had been reached to code share trans tasman flights with Air New Zealand, & greater co-operation for flyer benefits with both Airlines”. Again Virgin, follow their strategy announced months ago.
I believe part of this agreement, was to ensure & return, the Domestic market back to Air NZ.
Air New Zealand are one of the Airlines in the Virgin Group partner Airlines, to earn & spend & receive FF benefits, which are set to be expanded.

Virgin Blue have become a huge if not the major force for the Australian market. The monopoly of QF on domestic networks, charging as much as it would be to travel to Bali to take an internal flight, has been broken. The Virgin Brand is very well received & regarded in Australia.
Yet they are not low cost in the traditional model.
They have a Premium Economy section, terrific Contemporary lounges, stylish, great food & drink options. The PE ticket offers just the same as Business class in Australia / or Europe.

The trans Tasman routes have been taken by EK flights, with an A380 AKL -SYD, and then AKL – MEL / BNE with A345’s each day. ( I have seen all these flights full when i went through AKL, all leaving with around 17hrs daily). This amounts to 1,100+ seats a day.
Air NZ have reduced their B767 flights to mostly A320 aircraft. Their one way Business fares run at over AU $1,000.

It would make perfect sense to expand & link the currently successful Australia market both Domestic & international, rather than continue in another country’s domestic market. It will also give Air NZ a fair go in its own country, & strengthen its own base, which in all senses is good for a small and superb Airline, & country.

Virgin Blue’s new CEO is looking at moving it towards a full service Airline, with Business class & / or PE.
Certainly those with the Gold cards of the Virgin group, can have the many benefits of the Australian travel market both domestically & regionally.

A sensible move & one that will serve the needs of both NZ & Oz customers, offering more choice on an expensive regional route. Few will be unhappy with this move in many of the Airlines

[Author]

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