Forum Archive Index - May 2001

[Greg <g&jelliott@xtra.co.nz>]

Snoopy, would you believe...I have spent most of tonight researching and
drafting an answer for you on this, in depth etc. Was just about finished.
Computer crashed. All gone.

And I was about to conclude by saying that I have spent too much time on
this now, and really need to get other work done. I'll put a couple of brief
paras in for you and leave it for a while.

> From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
> Reply-To: sharechat@sharechat.co.nz
> Date: Thu, 3 May 2001 15:23:31 +0000
> To: sharechat@sharechat.co.nz
> Subject: Re: [sharechat] Airline shares
> 
> Thanks Brian, Greg, Andrew and Peter for your useful comments on this
> topic.
> 
> Greg, perusing 800 articles and coming up with the reasoned
> conclusions you did would put many pro analysts to shame, so you
> need not apologize for not being one.  I was interested in your
> bracketed comment
> 
> "(the SAAB is a reliable work horse on existing
> routes but they could do with 2 more, also more ATRs
> and focus on the shorter main trunk routes, and focus
> the Beech 1900s on the short provincial routes)."
> 
> Now it seems to me that you are suggesting larger planes are needed.
> Yet back in the early Air New Zealand domestic days, did they not run
> Fokker Friendships (around SAAB capacity) on these routes, a plane it
> would seem in hindsight was too big to be economic?   So I am curious
> at your reasoning behind this statement.
> 
There are 3 market nices: 19 seat, 30 seat and 65 seat. Friendship fits none
of these and is not customer friendly - nobody likes banging their head.
That's also why the Metro is going.

30 seat market in particular (Air Nelson's SAABs) have been running to
capacity last few months. They have asked for and are about to get another
plane. Bigger is not always better, depends on the niche. Extra plane also
provides flexibility with scheduling.


> Further, I am also curious about the situation with code sharing and
> international landing rights.  Now I understand the usefulness of Air
> New Zealand using a star alliance partner to fly into London, rather
> than a half full plane of their own.  But this doesn't mean they have
> given up their landing rights into Heathrow, London does it?

No, Air NZ still works Heathrow. 6 flights a week? Not sure how the trade
off works with code sharing.

 Or did 
> they never have landing rights there, was it only to Gatwick the
> other London Airport?  But if Air New Zealand aren't actually flying
> any of their own planes to London, and have no future intention of
> doing so, just what rights is Helen Clark talking about negotiating
> with the British government.  I guess I'm a little confused as to how
> this landing rights system works.

We have landing rights to London. Most nations still protect national
industries, and prevent foreign ownership or foreign carriers working the
domestic scene. NB World aviation market is slowly liberalising (5 nation
agreement signed today with NZ, US and others).  Aust and NZ have led the
way with liberalising domestic environments - OZ in Jun 99, ostensibly to
secure Ansett's future bu allowing SIA to buy it. We stopped that!

Australian deregulation now allows foreign ownership in Aust domestic
airlines. Branson owns Blue as you say, although his US acft have been
registered in Aust, and set up as an Aust company. So for trans-Tasman
purposes, that should allow them access to NZ, as an Australian company,
save for having to satisfy NZ CAA that they meet all safety requirements.
Virgin Blue are not counting on any tradeoffs. Govt took the view that
trade-offs would be on the table. Don't know where this is going.

Interesting theory about Virgin/Ansett!!
> 
> Andrew, I see the point about Virgin Blue being an Australian
> Airline.  I suppose you mean it is registered as a company in
> Australia.  But it is still British *owned* by the Virgin Group in
> the UK, so in that sense it is British.   And it would seem that it
> is the ultimate ownership, rather than where the airline company is
> incorporated, that is the key issue as regards trading off
> international landing rights.
> 
> I know that Virgin Blue has nothing to do with the
> European operations of Virgin Atlantic.   While technically correct,
> both airlines still both enjoy the support of the same shareholder.
> It is hard to imagine that Richard Branson regards them as
> completely separate, even though legally, they are.
> 
> I don't see Singapore Airlines getting too concerned about the short
> term performance of Air New Zealand.  In fact I would suggest it
> rather suits them that Air New Zealand has a couple of bad financial
> years.  If Air NZ/Ansett don't meet certain profit targets, then no
> top up payments to Brierley Investments are required, thus saving SIA
> millions of dollars!  In fact it wouldn't be beyond the bounds of
> possibility that two years out SIA might use their influence on
> Branson to engineer a merger between Ansett and Virgin Blue.  Air
> NZ/Ansett CEO Toomey is jumping up and down about the Impulse/Qantas
> merger at the moment.  I don't think that is going to be called off.
> But by getting the Australian commerce commission to officially
> sanction that, how could the Commerce Commission not sanction a
> merger between Ansett and Virgin Blue down the track?   How is that
> for a grand conspiracy theory?
> 
> And now to Peter's latest 'rave' on the subject ;-)
> 
> "I cannot agree with you with Air New Zealand is
> currently demonstrating any reasons why they should be
> treated as a 'best in breed'."
> 
> Well, I didn't exactly say that.   I said that if you were to invest
> in airlines you should invest in the best ones.  Unfortunately for
> Air NZ both Qantas and Singapore airlines (the direct
> competition) fall into that category!
> 
> Personally I think Air New Zealand are well managed.  They have to be
> to 'hang in there' with the competition!  It seems to be a series of
> factors (intense competition in Australia, downturn because of the
> olympics, digesting the different culture of Ansett, a spike in fuel
> prices and the weak New Zealand dollar) any one of which they could
> have coped with, but when all 5 hit together, well, it hurts!  I
> regard myself as slightly 'underweight' in Air New Zealand but won't
> be buying any more of them until I have a clearer picture as to how
> they will fund the 5 billion dollar fleet upgrade for Ansett. SNOOPY
> 
> (disc: Hold AIR)
> 
> 
> 
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
> 
> 
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