Reflecting weakening international demand, Air New Zealand has announced 200 layoffs from its 11,500 work force. Half the layoffs are from international cabin crew with the balance being in non-shop floor engineering and head off staff. Labour cost savings are estimated at NZ$20 million per year.
The airline has already cut long haul capacity to the United Kingdom, China, and Japan by 8 percent and expects the reduction to reach 13 percent by June 2009.
Last week Air New Zealand said it was not cutting domestic flights for now as demand on the main trunk and Queenstown routes remained good.
Qantas airlines, however, has announced it will cut in its flights within New Zealand by 25 percent by late January and it is not restoring its Wellington-Christchurch flight. Aviation industry commentators suggest that while Qantas is winding down flights, its budget fare subsidiary, Jetstar will step into the breech to fill some of the flights. Jetstar as applied for an operation certificate from New Zealand"s Civil Aviation Authority.
Should Jetstar step into the NZ domestic market, Air New Zealand will have to adapt its domestic business strategy to meet the new competition. Air New Zealand's budget fare subsidiary, Freedom Air, was shutdown earlier this year having seen off a previous round of competition since 1996.