Freedom spreads its wings

By Graeme Kennedy

Friday 4th October 2002

Air New Zealand low-cost subsidiary Freedom Air will become the biggest carrier between New Zealand and Queensland with its expanded transtasman schedule later this month.

The leisure-oriented airline will provide 40% of seats from Auckland, Hamilton, Palmerston North, Wellington, Dunedin and Christchurch to Brisbane and Coolangatta as it takes over some services operated by its parent.

Freedom will take over all six Air New Zealand Wellington-Brisbane flights and increase services from Christchurch to the Queensland capital to seven as Air New Zealand cuts its frequency from daily to two a week.

Chief executive Wayne Dodge said full-service airlines, whether Air NZ or Qantas, could not make money on Queensland services, which carry up to 90% leisure travellers.

"Being full-service network carriers comes at a cost and their fare structures need business revenue or they must find ways to cut costs," Mr Dodge said. "We don't have those costs so we can make money out of leisure travel.

"Freedom has always been in profit after our first 18 months and this year will be quite good for us."

Mr Dodge said Freedom would continue to fly to Sydney and Melbourne and was looking at a new route to Maroochydore on Queensland's Sunshine Coast.

The carrier last month ended domestic flying which began in May last year as Virgin Blue talked about starting a New Zealand operation after Qantas New Zealand collapsed.

"There was an opening in the domestic market before Qantas came in in its own right and we decided to do it ourselves," Mr Dodge said.

"The market responded to our price stimulation and ignited a strong competitive response from Qantas but we ended the operation as it would have conflicted with Air NZ's new lower-cost product which starts on November 1.

"We are successful in delivering every-day low fares efficiently with an on-time schedule in a friendly and smart way but if Air NZ delivered that as well, where was our point of difference?"

Mr Dodge said the global proliferation of no-frills low-fare carriers, of which Freedom was one, was driven by new internet technology which cut distribution costs dramatically, particularly with electronic ticketing, which removed mountains of documentation. Further savings came from cheery but basic cabin service without meals and movies.

He said Freedom had received up to 90% of its domestic bookings and 45% of international on-line among the highest in the industry, which gave it better savings than potential rival Virgin Blue.

Unlike Freedom, Virgin paid travel agent commissions and had a much bigger staff than the New Zealand carrier 100 workers for each aircraft compared with 50.

"We don't employ anyone in Australia but contract everything out," Mr Dodge said. "That makes a big difference and gives us speed and flexibility when we need it we were able to pull out of Fiji very rapidly after the coup because we had no staff of our own."

The airline's future now seems assured with its strong position in the Queensland market traditionally New Zealanders' favourite holiday destination.

"Carriers of Freedom's type that deliver a lot of value to travellers have fundamentally lowered costs to provide lower fares and it is likely that a lot of short-haul flights, of four to five hours, will migrate to this type of operation," Mr Dodge said.

"The model is robust and unstoppable and I cannot see why it won't grow but that is for the market to ultimately decide."

Comments from our readers

No comments yet