Jetstar’s decision to end its regional services from November 30 to centres like Nelson is a concerning blow to our local economy. My worry is that reduced competition will see airfares rise.
We should not underestimate how important affordable air links are for Nelson. We are a geographically isolated region but our well located airport and frequent flights has given us a competitive advantage. We have much better air services than any other city of our size.
The benefits have not just been for Nelsonians own private travel. The competitive airfares have helped make us an attractive destination for our $400 million a year tourism sector.
The quality of air services has also made Nelson a hub for hundreds of small professional service businesses that work all over New Zealand and contribute much to our local economy.
Jetstar’s demise can be put down to three factors. These regional services started out in 2014 as part of the intense Trans-Tasman rivalry between Air NZ and Qantas. These airlines entered into a code share agreement last year reducing the flow of passengers from Jetstar’s owner, Qantas. Secondly, tourism and the NZ economy is slowing due to poor Government policy and global uncertainty. The third contributor has been the rise in the cost of fuel.
Nelson has been through this competitive cycle before in air services. We had cut throat competition between Origin Pacific and Air NZ from 1997 to 2006 that saw unsustainable low airfares. Costs crept up until Jetstar re-entered the market in 2014. Cut price fares like recent Jetstar specials of $30 could never last. Nelson needs stable, affordable fares that can be sustained.
I am a loyalist to Air NZ as it way out class’s most international airlines for service and innovation. The local Air NZ airport staff and flight crew give excellent service. Air NZ showed the right culture in offering to pick up displaced Jetstar bookings. I encourage Air NZ to be extra careful with its pricing and service standards with the return to having a near monopoly in Nelson. Any arrogance will result in a backlash from customers and its majority shareholder, the NZ public. I will not hesitate to lodge a Commerce Commission complaint if I see evidence of price gouging.
We are fortunate, unlike other centres losing Jetstar, to have a check on Air NZ with Sounds Air. It is a good service that I use when the times suit. We need to consciously choose to give Sounds Air a share of our business so as to keep some competitive pressure on Air NZ. I am also hopeful that Origin may re-enter the market.
This month Nelson’s new airport terminal will be completed. This is a project I have long advocated for and of which our Airport Company has done a superb job of delivering. Despite the loss of Jetstar, I remain confident about the future of Nelson’s aviation industry and its continued growth. My job will be to help keep Nelson’s air services affordable and competitive.