Between 1994 and 1996, a small New Zealand airline Kiwi Travel International Airlines established by Ewan Wilson turned Australian-New Zealand air travel on its head. Initially operating from secondary NZ airports Hamilton and Dunedin, the carrier expanded to Christchurch. Offering a “Cola and Peanuts” fare, they introduced fares that significantly undercut Air New Zealand and Qantas, the established trans-Tasman carriers.
Air New Zealand countered by establishing its own low cost subsidiary Freedom Air in December, 1995 which also operated from secondary airports. Fares plunged so low that passengers were picking up flights for $US120 round trip for the 2200 km (1378 mile) international flights.
This unsustainable situation was not to last and Kiwi went under in September, 1996 stranding passengers in Australia and New Zealand, having their planes impounded and Ewan Wilson charged with four counts of fraud.
Almost 20 years later, after being elected to Hamilton City Council and leading aBoxing Day tsunami relief operation, Mr Wilson is back with his new venture Kiwi Regional Airlines. He has a 54.5% share in the airline which is backed by New Zealand School of Tourism CEO Nicole Domett (22.7%) and used car dealer Eugene Williams of 2 Cheap Cars (22.7).
Starting next Tuesday using one SAAB bought from a Polish airline, Kiwi Regional will connect four regional centres on 27th October with twice daily direct flights between Dunedin and Queenstown, as well as four return flights weekly between Dunedin and Nelson, and Nelson and Hamilton. Fares start at $44.50 for day one and then start at $79 for a sector.
To succeed in starting an airline I believe you need:
- Routes with little or no direct competition-Kiwi regional definitely has this one down pat
- Routes with demand. I am not at all convinced about twice daily Dunedin to Queenstown. I think Hamilton to Nelson is a possible goer. It is a nightmare to fly between the two. You either have to take an expensive flight via Auckland or Wellington or take bus or drive to Auckland and fly from there. Kiwi’s $79 fare will crucify Air New Zealand’s $260+ fares and passengers will save at least two hours travel each way. I think over summer planes could get packed. I think they should consider Hamilton-Queenstown direct.
- A sound business plan –hopefully they have this under control-have no evidence either way
- Significant cash reserves- The wealthiest of the investors is 2 Cheap Cars, New Zealand’s second fastest growing company. The test will be how much cash they will tip in to keep the airline afloat.
- Adequate correct aircraft- Kiwi’s major weakness and my biggest fear. With one plane, all they need is one late departure and their entire schedule is wiped out. Or if their plane is out of service for a week or a month, they are in massive trouble as PEOPLExpess found in the USA. Further, Wilson and 2CheapCars had a very public spat over who actually owns the plane which was very odd.
- International connections- New Zealand carriers need international tourists to fill their planes. Kiwi have no relationship with any international airline. Air New Zealand and Jetstar who fly domestically have relationships with almost every international airline that services New Zealand.
- Innovative product eg Jetblue in the USA provided more leg room when they started, Norweigian has free wifi. Kiwi Regional have a twenty year old plane, complimentary water and sweets (candy) and the ability to pre order and pay for wraps and sandwiches. Does not feel innovative. Although I am in love with their beautiful luggage tags. I want to fly them just for these.. Their Boarding passes are also unique:
You also need luck– may this be with them in spades
Looking at the above list, the risks feel all too high on this one. Good luck to the risk takers and lets check in six months time and see how Kiwi Regional are going. I am not a nay sayer but New Zealand has a long list of failed airlines and Kiwi Regional are already complaining about how poorly sales are going. I know the enthusiastic team will be doing all they can to keep on flying.
Failed Air Services in New Zealand:
- Capital Air Services/ James Air/Avcorp (1978 to 1984)
- Ansett New Zealand (1987 to 2001)
- CityJet (May to November 1999).
- Kiwi International (1994 to 1996)
- Origin Pacific Airways (1997 to 2006)
- KiwiJet (2007 to 2008)
- flyDirect (2010)