Trans-Tasman flight war set to heat up - Qantas

20:40, Jan 11 2012

Continued weakness in the New Zealand economy and stronger competition from rivals such as Air New Zealand and Emirates will create tougher conditions on the trans-Tasman route this year, Qantas expects.

Accounts filed to the Companies Office just before Christmas show Qantas's New Zealand subsidiary, Jetconnect, reported a profit of $11.3 million for the year to June 30, almost unchanged on the previous year. It posted revenue of $77.7m, compared with $78.3m previously.

Qantas does not break out the performance of Jetconnect when it releases its full-year accounts.

Jetconnect's new chief executive, Shelley Musk, said yesterday Air New Zealand's revenue-sharing alliance with Virgin Australia, and Emirates' plans to boost capacity, would "definitely" make competition tougher on the Tasman route, an important feeder to Qantas's domestic network.

"It is going to be tough and I wouldn't see much growth overall, just [because] of the general dynamic in the [New Zealand] economy and the competition," she said.

Despite a tougher outlook for some key international routes, shares in Qantas had their biggest one-day gain in almost five months yesterday, closing up more than 5 per cent at A$1.55.

The latest government figures show Air New Zealand's seat utilisation on the route averaged almost 84 per cent in October, Qantas's 77 per cent, Virgin's 74 per cent and Jetstar's 73 per cent.

Jetconnect operates 90 per cent of Qantas's flights between Australia and New Zealand, employing just over 600 staff.

It has a fleet of eight new Boeing 737-800 aircraft painted in Qantas livery.