Forum Archive Index - May 2001

["james chamley" <james.chamley@xtra.co.nz>]

>
> Peter, thanks for pointing the story out.
>
> The recipe for success:
> 1/Continuing to chip away at operating costs, meaning flights are
> profitable at 50% loading.
> 2/Standardize on one type of aircraft to keep down servicing costs
>
> Seems to be goals that Air New Zealand/Freedom Air/Ansett are
> pursuing too.
>
> I see Ryanair are funding their planes by paying 15% of the purcahse
> price and borrowing the rest.   If they can do that successfully, why
> can't Ansett do the same in Australia?  Looks like Toomey is on to
> it.   Ansett can have a new fleet without putting too much cash down!
>
> Air New Zealand have already cut travel agent fees, and are investing
> heavily in their computer reservation systems, just as Ryanair have
> done.   Air NZ is starting to seriously promote booking through
> their website too, aka Ryanair.  I note that Ryanair was unprofitable
> for four years after its formation.  I wonder if, say, Virgin Blue
> will be that patient?
>
> The idea of flying into secondary airports to save landing fees seems
> to be a key part of the Ryanair strategy.   Maybe Virgin Blue will
> start flying Paraparaumu to Whenuapai and give AIA and AIR NZ some
> real competition!   And some of these secondary airports in Europe
> are privatised ex military bases, increasing the parallel further!
>
> There is one area where the parallel doesn't quite ring true though.
> I can't see Selwyn Cushing playing soccer against the baggage staff-
> although Gary Toomey might!
>
> It actually makes me feel better about continuing to hold Air NZ
> shares after reading the article.  Thanks again.
> SNOOPY
>

Whenuapai is a very likely scenario - think of how many people travel to
Wellington every day from Auckland's north shore that would save 1 hour per
day each way in commuting time.  However, there would have to be a fair bit
of cash spent; parking, terminal facilities, not to mention the
environmental complaints from those people who want cheap airfares but not
the noise of aeroplanes over their houses.  AIA may say that it has the room
to build accommodation and maintenance facilities but why do this when they
are already in place - with 2 other runways, 20 miles to the north?  AIA can
also put industrial and commercial tenants in places that noise restrictions
would make residential tenants out of the question.

Wigram, however, sits mainly unused in the middle of Christchurch where fog
often is localised and closes the main airport.  Another great disposal of a
state owned asset?

Also consider Ohakea.  Bigger and better facility than Palmerston airport,
better approaches (as Ansett discovered to their cost), and a longer strip,
and unlike Palmerston not surrounded by houses where the residents are
already complaining about noise.  Still less than half an hour by road to
the centre of Palmerston.  From a freight base at Ohakea you can service the
Manawatu, Hawkes Bay and Wellington (which has a curfew - as does
Paraparaumu)..

(If the airforce had looked at this a few years ago maybe it could have
generated enough funds to make it a more attractive proposition and New
Zealand would not now be in danger of being overrun by the combined forces
of Tonga and Kiribati!)

As for AIRVA the Impulse deal sounds like a real game breaker for them.  If
the opposition (Qantas) gain the slots in Sydney and Melbourne from Impulse
then its expansion is effectively stymied.  You can move larger capacity
aircraft onto the same routes but then where does that leave Ansett's plans
to expand the Australia to West Coast USA market?  Despite the initial
success of Virgin Blue you also cannot rule out, in the long term, the
parochialism of Australians - they will back their own team when push comes
to shove and Qantas is their team, unlike Ansett (no matter what you call
them).

Still most important seems to be the question of funding it all.

By the way - I wouldn't put money on Toomey in the soccer field but as a
front rower in the scrum he may be quite a handful!



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