Published HBT 1/08/15
The recent visit by Jetstar senior managers was very encouraging and we rolled out a great welcome mat that must surely have impressed upon them that we are serious. This is a once in a lifetime opportunity and It is absolutely essential that Hawke’s Bay is one of the four new destinations to be included in the airlines new regional services. Both the costs and risks are minimal yet the economic benefit could well be of the order of $50 million annually. Its a pity those who have committed so much energy and money promoting amalgamation that offers a measly $10 million annual benefit, have not shown a modicum of interest in this issue.
With over 120 000 urban population we are surely near the top of the list. We are the 5th largest urban area in the country, and of the areas under consideration second only to Hamilton, and way ahead of Rotorua, Palmerston North, New Plymouth, Nelson and Invercargill.
Our Auckland flights already carry more passengers than any of the other routes under consideration. In fact the numbers out of Hamilton, Tauranga and Rotorua appear so low, one wonders why Jetstar are considering them at all.
We need to get real. Six hours by car from Auckland or eight hours in a bus, or four hours from Wellington by car, and five in a bus, and goodness knows how long for Christchurch, is a big disincentive to people thinking of visiting. Assuming of course the roads are open and not closed as both SH5 and the Manawatu George have been of late. We not only compete with places that are conveniently close to Auckland by road, but also places much further away but with significantly lower air fares.
High airfares have been our achilles heel for years. Hawke’s Bay travellers are generally well aware of our horror prices. Air New Zealand have even effectively admitted their prices are high by suddenly advertising a range of attractive specials the very day Jetstar executives arrived in town, demonstrating clearly the brighter future ahead of us, if only we can get them to come here.
Further evidence of our high prices is illustrated by distorted travel statistics. One survey found 50% of local flyers were on business, yet nationwide surveys show this group make up only 15-20% over all. The reason for this disparity has to be that the most price sensitive categories, visiting friends and family, or holiday makers, are clearly choosing not to fly here. Perhaps we should be asking ourselves if they choosing not to come here at all.
Jetstar will bring airfares down just as they did on main trunk flights six years ago and Hawke’s Bay travellers could save a whopping $25 million a year. People who now drive will find flying affordable. At the same time reduced airfares will stimulate demand from both visitors and locals. BERL research estimates air travel has a price elasticity of -1.6%. meaning a 25% reduction in airfares could result in nearly 200 000 more people travelling by air each year. If just half are visitors and each each spends only $250 during their stay, the local economy will be another $25 million richer.
Some of the 100 new jobs Jetstar expects to create will be here in Hawke’s Bay but Air New Zealand employment is unlikely to be affected because demand overall will increase.
Fortunately we have built a longer runway despite the opposing efforts of a negative and visionless minority. It may not be required for the Q300 Jetstar aircraft, but the longer runway may be decisive as it means both Jetstar and Air New Zealand will be able to bring their larger A320 pure jets into Hawke’s Bay for either a scheduled or non scheduled services. Do not be surprised if Air New Zealand suddenly start flying jets into Hawke’s Bay despite claiming they will not do so. They have used this tactic before to counter increased competition and may well do so again.
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