Latest / Best of Business / Andy Bowley: Forsyth Barr Head of Research on Air New Zealand teaming up with Virgin Australia

Transcript

Andy Bowley: Forsyth Barr Head of Research on Air New Zealand teaming up with Virgin Australia · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeart Radio.
• 0:16
  Speaker 2: 9292 is the text number. Standard text fees apply. We're
• 0:21
  Speaker 2: going to have a chat to the Parents' Alliance about
• 0:23
  Speaker 2: this poll after five o'clock. Also, by the way, Thomas
• 0:25
  Speaker 2: Coghlan is in for Barry Soper and we'll have a
• 0:27
  Speaker 2: chat to him about it too. Standard text fees apply, obviously,
• 0:31
  Speaker 2: if you're going to send me a text now in
• 0:32
  Speaker 2: New Zealand. Air New Zealand is dumping Qantas for Virgin
• 0:35
  Speaker 2: Australia across the Tasman. If this is approved, the deal
• 0:38
  Speaker 2: would see Virgin and Australia become Air New Zealand's, rather
• 0:42
  Speaker 2: see Virgin Australia become Air New Zealand's official domestic partner
• 0:45
  Speaker 2: around Australia, which means that if you fly with Air
• 0:46
  Speaker 2: New Zealand from, let's say, Sydney to Melbourne, it will
• 0:49
  Speaker 2: be on a Virgin plane. Andy Bowley is the head
• 0:52
  Speaker 2: of research at Forsyth Bar and with us. Hi, Andy. Hi, Heather.
• 0:55
  Speaker 1: How are you?
• 0:56
  Speaker 2: I'm well, thanks, mate. How did it play out? Was
• 0:57
  Speaker 2: it Qantas dumping Air New Zealand or Air New Zealand
• 1:00
  Speaker 2: dumping Qantas?
• 1:02
  Speaker 1: I don't really know, and I'm not sure we'll find
• 1:05
  Speaker 1: out any time soon. But I think it's fair to
• 1:09
  Speaker 1: say that Qantas wasn't necessarily the natural bedfellow for Air
• 1:13
  Speaker 1: New Zealand. And with the prior relationship with Virgin that
• 1:19
  Speaker 1: Air New Zealand had prior to 2018, when that was
• 1:23
  Speaker 1: dumped and Qantas was taken on, it was kind of
• 1:27
  Speaker 1: a much more natural alliance between the two airlines. Yeah.
• 1:31
  Speaker 2: Is this a sign? I mean, is this basically strategically
• 1:34
  Speaker 2: from Virgin and Air New Zealand taking on Qantas' size?
• 1:39
  Speaker 1: Yeah, possibly. I think you've got to be very wary
• 1:42
  Speaker 1: of the inroads that Qantas has made both across the
• 1:46
  Speaker 1: Tasman since COVID, but also internationally, you know, for example,
• 1:50
  Speaker 1: the Auckland JFK service that they've successfully launched.
• 1:53
  Speaker 2: What do you think the impact will be on prices
• 1:55
  Speaker 2: for an Air New Zealand flyer?
• 1:59
  Speaker 1: I recognize this is a hobby of yours to talk
• 2:01
  Speaker 1: about pricing, Heather, for airlines. But look, I suspect no
• 2:10
  Speaker 1: material change would be my expectation. I think pricing broadly
• 2:16
  Speaker 1: in an aviation sense is really driven by supply and demand.
• 2:19
  Speaker 1: With airlines in particular using supply as a means to
• 2:23
  Speaker 1: manage pricing, particularly in a high fuel price environment, hence
• 2:26
  Speaker 1: why in recent times you've seen capacity cuts from airlines.
• 2:31
  Speaker 2: Can we look back at the breakup of Virgin and
• 2:33
  Speaker 2: Air New Zealand all those years ago as having been
• 2:35
  Speaker 2: a strategic mistake then?
• 2:38
  Speaker 1: I think that's one way of looking at it. But
• 2:42
  Speaker 1: the reality with any kind of corporate relationship is that
• 2:46
  Speaker 1: you've got to have like-minded people at the top. You've
• 2:49
  Speaker 1: got to have management teams that recognize the benefits of
• 2:53
  Speaker 1: the partnership. And if that's not working, then the relationship
• 2:58
  Speaker 1: isn't going to work either, is it? Yeah. That's kind
• 3:00
  Speaker 1: of what happened, I think, that things kind of fell
• 3:04
  Speaker 1: apart with regards to the broader relationship at the top
• 3:07
  Speaker 1: of the tree for those two players then.
• 3:09
  Speaker 2: Would you say that the thing that has really caused
• 3:11
  Speaker 2: this to happen today is that Qantas is just so
• 3:14
  Speaker 2: aggressively coming after Air New Zealand?
• 3:18
  Speaker 1: I think that's one theory, absolutely. I wouldn't say that's
• 3:23
  Speaker 1: necessarily the case, but I think that's probably part of
• 3:27
  Speaker 1: the mix and part of the broader decision-making here. All right.
• 3:30
  Speaker 2: Hey, good to talk to you. Thank you so much, Andy.
• 3:31
  Speaker 2: Andy Bowley, Head of Research at Forsyth Bar.