Qantas16 wrote:I'm unsure what an airlines profit has to do with the performance of a specific route?
Qantas16 wrote:"route profitability" is incredibly hard to measure (i.e. value to network) etc.
In the absence of route-specific metrics, the profitability of the airlines speaks more volumes as to the sustainability of their route network than a gut feeling does.
The fact of the matter is that these airlines run lean operations, and in some cases, only operate a handful of routes - they are unlikely to run flights that are unprofitable, simply for the purpose of connections and "value" to their overall network, as you refer to. That strategy is more suited to a mega-carrier like EK.
Qantas16 wrote:Also, all of those routes (except for NAN-ADL) are routes where both airports are already served by the airline on other routes (e.g. FJ already flies to SYD & SUV before they launched SYD-SUV) and this reduces costs.
Actually, there are many examples of profitable airlines successfully serving destinations in the region at a low-frequency, from only one port - for example:
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TN: PPT - AKL (2-3x weekly) - TN recorded a USD 22 million profit in 2016
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FJ: NAN - WLG (2x weekly) - FJ recorded a FJD 84 million profit in 2016
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HA: HNL - PPT (1x weekly) - HA recorded a USD 244.1 million (net) profit in 2016
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NZ: AKL - NOU (2x weekly) - NZ recorded a NZD 382 million profit in 2016
Some of these routes have been operating for
more than 20 years. If they were unprofitable throughout this period, they could easily have been made seasonal (like NZ did with CNS) or dropped (like FJ did with CBR) - the fact of the matter is that they were not, which weighs more in favour of arguing that they are profitable than unprofitable.
Qantas16 wrote:For IE/PX to start services to AKL or NZ to start HIR/POM would require setting up offices, hiring staff/contractors etc for a once or twice weekly route...
Qantas16 wrote:you need to take into account those added fixed costs of those sort of routes.
There is no need to set up a dedicated office. In fact, even though PX fly to HIR, TSV, VLI and elsewhere, they do not maintain their own offices at those ports - they use GSAs. Similarly, PX already have a GSA in AKL, as do IE, so no new investment would need to be made here in that regard.
Regarding other contractors (such as airport ground crew), TN do this in AKL, FJ do this in WLG, HA do this in PPT and NZ do this NOU (as just some of many examples). It clearly can be done successfully, and is being done successfully. FJ opening NAN - ADL this year only re-affirms this too.
Finally on this, and as per my reference to one-stop AKL - POM flights currently being priced at approximately NZD 1,000 - much more than AKL - CNS and other routes of similar distance - "those added fixed costs" can easily be absorbed by, and priced into, the market.
Qantas16 wrote:I don't believe the route would succeed based on the limited market
Qantas16 wrote:maybe POM will be a big market one day, population would suggest it could be, but it's not right now.
Despite almost 3,000 New Zealanders living in Papua New Guinea, despite Papua New Guinea being New Zealand's second largest market for trade in the Pacific, despite significant aid, defence and other and government-related contracts and despite foreign visitor arrivals being forecast to increase by 10.7% this year, and double by 2022, you still state that there is a "limited market."
What about an impending free trade agreement between New Zealand and Papua New Guinea? What about more fuel-efficient aircraft arriving at NZ (A320 NEOs) and PX (737 MAXs)? What about the potential for code-sharing, like PX do with QF, and like NZ do in most Pacific markets? What about Star Alliance connections (both commercial and tourism-related) from North America?
We will have to agree to disagree on this.
Qantas16 wrote:My point was that it would be a very marginal route
"Marginal" needs to be understood in context.
This is the Pacific, where distances are large and populations are small. It is not like other markets. Tourism and trade - indeed, any tourism and trade - are absolutely
vital to the region's economic sustainability. In line with this, low-frequency flights do need to be strategically considered - particularly by the flag carriers of Pacific nations - when they might otherwise not be elsewhere (based on distances, populations and other factors).
Qantas16 wrote: without a subsidy
The region's route-specific subsidies are well-known - they are generally publicised through annual government reporting. These days, such subsidies are mostly isolated to routes which are vital to connectivity with the outside world - for example, NZ to IUE (the only air route to this destination). Governments no longer throw money at a route for the sake of it, and a number of subsidies have been withdrawn in recent years (for example, NZ's APW - LAX service).
Cheers,
C.
