Why Air New Zealand is more profitable than Qantas

NZ has a near monopoly domestically and a complete monopoly for all long haul routes ex AKL with the exceptions of HKG and SIN where revenue sharing alliances are in place with the only other carrier on respective routes. Does anyone need to say more?

Why is NZ ahead of QF?

1. Monopoly routes.
2. Lower cost base.
3. Higher loads.
4. Newer aircraft.
5. Government support.

**drum roll** waiting for someone to smash Qantas management

Any airline should be making money when they have a monopoly, and then completely naive when competition arrives.

air new zeland is better off  for these reasons

1: they bought new aircraft at the right time. eg(777 and 787)

2: goverment support 

3: they have a mangment team that has a good future plan and actually know how to run an airline 

4: they do not have as much compitition as qantas.

What's the point of comparing apples with oranges?

Why does AIZ make a profit? How about:

• $NZ1.2B bailout 13 years ago by the NZ Govt.
• Walked away from $AUD5B Ansett collapse for a blood-payment of $AUD200M.
• 10 years of cutting staff and costs.
• Benevolent shareholders (the NZ taxpayers).

It's easy when you can wipe the slate clean and essentially start from scratch.

"But their fates have now always been so far apart."

Assuming from context the word should be not instead of now.

Compare QF and NZ ?  simply fly SYD - AKL. on 737 - 320 to compare. The fares options are far better on NZ and with Works Deluxe you effectively have Premium Economy. Also the whole attitude / vibe is so different 

Graham

It's easy to be simplistic about the differences, but it is more complex than some are saying.  Bear in mind Qantas did make a rogue bid for Air NZ/Ansett back in 2001 specifically to stymy the Singapore Airlines bid, and it succeeded, because the delays in approving the latter saw Ansett bleed so much red ink, it handed Qantas domestic dominance for some years.  The tables have turned somewhat.

Air NZ did get a NZ govt bailout then, but has had nothing since, and it remains publicly listed, and pays dividends.  You can put this down to the following:

- Dominance domestically. It has grown this business by keen pricing, while avoiding competition on all but the main trunk route (where Jetstar doesn't have the frequencies to compete on the high yielding business traffic, nor the perks like lounges or larger pitch seating for premium frequent flyers).  It bought three smaller operators over the years which have much more competitive costs than it had with its legacy operation.

- Tasman/shorthaul ruthlessness on costs.  It has worked hard to get costs down and to put in products that focus on the main leisure market and enough business travel to make this work, but the partnership with Virgin Australia has been critical in providing a feed at the Australia end.  Short haul to the Pacific faces limited competition as well.

- Long haul lack of competition. It has culled most marginal routes (e.g. Beijing, Christchurch-LAX, HKG-LHR) and all that remain are monopolies except Honolulu and LAX-LHR (which has high yielding point to point traffic to help sustain this one route from AKL-LHR, unless QF on LHR-DXB).  HKG has been secured by alliance with CX, SIN is being started with an SQ alliance.  NRT survives in partnership with ANA (before than JAL), and PVG is a gamble on long term growth.  N.Am is lucrative and picks up useful traffic from Australia, partly because QF pulled out of AKL-LAX, and US carriers haven't returned to NZ. 787s may change that.

- Smart fleet management. Going early on 777s for growth and to phase out 747s has saved a fortune in fuel and helped grow cargo, and A320s have been doing the same against 737s.  

- Partnerships with whoever helps the business.  Beyond Virgin Australia/Star Alliance, NZ's partnerships with CX, VS, BA, AF/KL and ET have all been about being the main feed for traffic to/from NZ and to be relaxed about who it feeds given its dominant monopoly operation.

- Ruthless cost/yield management.  Whether it be charging for seat selection, OneUp bids for upgrades, higher density seating on 777s in economy, Skycouch, disaggregating products on shorthaul/domestic, or cutting niceties in premium cabins, it has become keen on generating revenue and reducing costs that don't add to demand/market share.

NZ being a small market has not been worth many foreign airlines servicing.  QF has become less of a competitor, and while EK is important, it always operates via Australia, so has a disadvantage for some high yielding traffic to Europe as it is always a two stop trip to Europe, unlike Air NZ with its partners.  Partnering with SQ and CX effectively removed the two biggest competitors to Asia and Europe.

Bear in mind also that Australia's geography and SYD capacity constraints restrict one hub being dominant, which makes it harder for QF compared with competitors which can more cheaply operate to multiple airports, compared to QF seeking to operate long haul from multiple airports.  NZ has only AKL and concentrates long haul from there.  

I think NZ's ruthlesness when it comes to costs has been one of its strongest assets. It makes plenty of very unpopular decisions that people whinge about but they live with. QF seem to be taking more of a 'lets still have a nice national airline' approach to cost management whereas NZ have a much more sharply focused 'lets reduce every cost we can' approach.

For example, NZ hardly provide any award seats to partners (none TT even in Y). This is unpopular and people whinge about how NZ aren't 'playing their part' in *A but people live with it and it saves them money. Same goes for the poor value of the Airpoints program, the 777 10 abreast Y seating, confusing LCC-type fare classes TT etc. People dont like these decisions, but they live with them.

Biggest difference is staff attitudes...

- AIR NZ staff want to be there, when they say they are there to help - they geninely mean it, they aren't driven by penalties, overtime, loadings or allowances, also help to find a resolution - particularly for higher status pax, they don't pass the buck.

QANTAS staff more often than not, do not want to be there. They are there for the perks, the cheap First travel, weekend loadings/allowances/penalties, the extra super, bludge the day and not take ownership of tasks. The number of times I hear CSM say "if we can do anything to help, just press your call button" and when you do it's like asking them for their left arm..... Better off not saying it.

I hold high status with both, and fly on both a lot. I am more loyal to Qantas given the P1 team and the assistance they give... and my huge amount of AU domestic flying. However, long-haul business is a no brainer.... NZ's J product and people (**smile**) trumps QF J & F.

IMO

NZ have innovation...

Qantas has none... Just follwers when they have no other choice!

Qantas lost government support when became public company and lost semi-monopoly when aviation was deregulated. Both decision was stupid and bring best-for-decades airline to its knees. In the past Qantas could dictate with whom make aliasing and with whom not while now Qantas looking to whom jump into bed. Sad story really.

Many have mentioned the NZ almost monopoly on domestic. Keep in mind that QF, VA and JQ have all tried to get in on that market. There's no law that makes it a monopoly so I have to assume that NZ has been able to keep their dominance by offering a product and fares that have been keeping the Kiwis happy.