Budget carrier Jetstar to stop turboprop services in New Zealand

[BENGALURU] Australian low-cost airline Jetstar, a unit of Qantas Airways Ltd, said on Wednesday it would stop its loss-making regional Q300 turboprop services in New Zealand by November end, a move that would benefit rival Air New Zealand Ltd.

The Melbourne-headquartered airline, which began flying to regional centres in New Zealand in late 2015, lost A$20 million (S$18.7 million) on the routes in the financial year ended June 30, Jetstar's chief executive Gareth Evans said.

"The New Zealand regional market is facing some headwinds, with softer demand and higher fuel costs and we don't see the outlook changing any time soon," he added.

Reacting to the move, rival Air New Zealand chief executive Christopher Luxon said at its annual meeting: "It does underscore how difficult it is flying in regional New Zealand."

Shares in Air New Zealand, which has 51 regional aircraft compared to Jetstar's five, rose 2.2 per cent after the announcement and ended 1.9 per cent higher on Wednesday. The country's flag carrier said it would consider whether to add capacity on the affected routes.

Jetstar, which currently offers up to 130 return services a week in peak season across five regional routes, said the move would not impact its other domestic and international jet services in New Zealand, that Mr Evans said contributed 83 per cent of its revenue.

Jetstar customers booked on regional services after Nov 30 will be offered options, including a full refund, it said.

The airline said it would begin a consultation process on Wednesday with about 70 affected employees and a final decision was expected before October end.

"Alternative employment options would be available for all affected Jetstar regional employees - made up chiefly of pilots and cabin crew - across Jetstar and Qantas Group businesses in New Zealand and Australia," it said.

Meanwhile, Air New Zealand said it would offer discount airfares to Jetstar turboprop customers, adding that it would not increase its lowest lead-in fares on the routes affected by Jetstar's withdrawal until at least the end of 2020.

REUTERS