New low-cost airline chances slim, say analysts
5:00AM Saturday May 05, 2007
By Liam Dann
Airline industry analysts are sceptical about the chances of a new low-cost airline starting up here after a United States-based aviation investor this week announced plans to set up a rival domestic airline called KiwiJet.
Air New Zealand investors were unfazed yesterday and the company's shares rose to a fresh high of $2.85 on news it was also considering launching a low-cost carrier.
Staff were told in a memo leaked to the media that a low-cost carrier was one of three or four growth initiatives being considered by the company as part of a strategic review.
Forsyth Barr aviation analyst Rob Mercer said he believed Air NZ could successfully run a low-cost brand alongside existing services and grow the market.
The key was to ensure it did not cannibalise the lucrative business market where passengers paid for full-price tickets at peak travel times.
Any secondary service would have to be run at non-peak times and target the leisure market.
Mercer saw little chance of success for a new entrant such as KiwiJet taking Air NZ on head-to-head on its main routes.
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