The skies between Australia and New Zealand are becoming crowded as two new startups vie for discount traffic on secondary routes across the Tasman Sea. At the same time Ansett Australia has launched its first flights to New Zealand, joining national flags Qantas and Air New Zealand on the primary Sydney-Auckland route.

New charter operator, Freedom Air International, has joined another newcomer, Kiwi International Airlines, in a head-to-head battle on critical secondary routes between the two countries.

Kiwi began scheduled flights last August from the New Zealand provincial centres of Hamilton and Dunedin to Sydney and Brisbane, using a B727-200. In November the carrier added a B757-200 leased from the UK charter carrier Air 2000.

Despite its tiny size, Kiwi's presence caused consternation at Air NZ because its niche operation was hitting the national flag carrier's business, diverting Australian-bound traffic from the provinces from Air NZ's flights out of Auckland, Wellington or Christchurch.

The response has come in the form of Freedom Air, a wholly-owned subsidiary of Mount Cook Airlines, which in turn is 100 per cent owned by Air NZ. Freedom Air is operating regular charters from Auckland, Christchurch, Dunedin, Hamilton and Wellington to Sydney and from Hamilton to Brisbane, using a B757.

Meanwhile, Ansett has begun operating a Boeing 747 twice a week between Sydney and Auckland - a market it has refused to enter for years because of doubts about potential profitability. The move comes as the carrier awaits regulatory clearance for Air NZ's proposed purchase of 25 per cent of its stock, which will probably come in March.

What makes Ansett's new service feasible is a block seat arrangement with Aerolineas Argentinas, which accounts for most of the capacity. Passengers arriving on Aerolineas services from Buenos Aires, which terminate in Auckland, will continue to Sydney on Ansett. Qantas previously provided that capacity for the Argentine carrier.

Not surprisingly, the increase in capacity on the trans-Tasman routes has touched off several rounds of discounting which analysts fear may make it even more difficult for any of the carriers to maintain profitability in the market.

Tom Ballantyne

Source: Airline Business