Using Air Pacific as its vehicle in the region.


Australia's Qantas is one of the world's most successful and dynamic airlines. It has just announced that it intends to buy up to 115 of the still-to-fly “Dreamliner', the Boeing 787 being designed by Boeing, the American builder of that familiar Pacific Islands workhorse, the Boeing 737.

A few years ago, Air New Zealand was near financial ruin. It was rescued by the New Zealand government, the former owner, which bought back more than 80% of the shares.
It recently nearly became 22.5% owned by Qantas. Air New Zealand, although mighty by Pacific Islands aviation standards, felt it was too small to survive alone in the killing global civil aviation climate in which several really big airlines had gone out of business.

In 2003, New Zealand and Australian regulatory authorities blocked the deal. They decided that such a merger would give the two airlines an anti-competitive stranglehold on their markets, one that would let them raise fares and otherwise exploit hapless travellers.

The two airlines continue to look at how they can together beat anti-monopoly laws.

In one way or another, Qantas and Air New Zealand dominate Pacific Islands travel and tourism. It's true to say that some Pacific islands airlines exist at their pleasure.

Where would Air Pacific, the most successful of the region's airlines, be without Qantas as a 46% shareholder? The answer is a big shudder.

Air New Zealand buzzes daily to Fiji and frequently to Samoa, French Polynesia, the Cook Islands and Tonga with its Boeing 737 and now Airbus A320 jets.

It carries mainly Kiwi tourists to the islands and islanders visiting friends and relations in New Zealand.

These destinations are safe, steady and profitable holiday and business market.

Air New Zealand shows no interest in flying into Micronesia or Melanesia, except New Caledonia and probably never will.

Some of its long-haul flights run through Fiji, Samoa and the Cook Islands to America.

Air New Zealand is vital to Pacific Islands tourism, no doubt about that.

Now making money again, it is investing heavily in big new jets. It has taken the first of eight 300-passenger Boeing 777 jets and ordered four Boeing Dreamliners for 2010-2012 delivery with options to buy another 42 more big jets.

As far ahead as can be seen, Air New Zealand's role in Pacific Islands aviation will remain pretty well as is.

Qantas is a different kettle of fish. In the Pacific, Qantas spells Air Pacific. It code-shares all of Air Pacific's daily flights on the Australian routes.

As a 46% shareholder in the airline, it benefits from money made by the Fiji airline's long-haul flights to Japan, Los Angeles and Vancouver via Hawaii and other regional flights.

Flying in its own colours, it has practically withdrawn from the Pacific Islands to leave them as Air Pacific's patch.

It code-shares Air Niugini's PNG-Australia flights which, since there is no competition for them, are big money-maker for both airlines since fares can be kept stacked up high.

Virgin Blue has looked at operating to Papua New Guinea and may do so eventually. That would be bad news for Air Niugini.

Could the Qantas attitude to the Pacific Islands change or will it continue to let Air Pacific be its vehicle in the market?

Last December, Qantas announced the setting up of Jetstar, a long-haul airline focused initially on the “Asian and Pacific cities” within six to ten hours of Australia. What does it mean by “Pacific cities?”

Probably Pacific rim cities rather than anywhere in the Pacific Islands except for the possibility, perhaps of Honolulu and Papeete. Logically, it should be more convenient for it leave the Pacific Islands to Air Pacific unless there is a surprise evolution of the market.

Jetstar will be a glossier, more upmarket version of the so-called budget airlines for passengers prepared to forgo a bit of pampering at the cost of lower fares. It will buy 65 Dreamliners, touted as being able to fly faster and further while burning less fuel than rival aircraft. The first will be delivered to Qantas in 2008 and the type is considered by the airline to be “ideal” for long Australian domestic flights and services to the United States, Asia and Europe. Jetstar will operate some of them beginning in 2007 with four Airbus A330.

From 2007 it is due to begin operating the first of the 500-passenger plus Airbus 380 jets on very long flights to Europe. It is unlikely that any of these giants will ever operate to the Pacific Islands unless they have to drop down at Nadi for an emergency.