Jetstar boss: Party time or crunch time as low-cost carrier takes the fight to Air New Zealand?

But far away, turmoil in the Middle East was spoiling the party for airlines.

The Strait of Hormuz standoff lingered with no confirmed solution on the horizon, even though geopolitical machinations, and fuel prices, were oscillating.

“It’s a dynamic industry but our biggest concern was supply. But we have more and more confidence on that because our fuel supplies are diversifying,“ Tully said.

That meant “not relying on the Strait, which could be open and shut every other day”.

“The price is obviously significantly elevated and we expect that to be the way it is for some time. And it’s not clear yet if the war is going to end sooner or later. So you’ve got to just control what you can control.”

Tully said Jetstar, just like Air New Zealand, had been managing some capacity changes but with the Wellington party: “We really wanted to reiterate that we’re not going anywhere.”

The budget airline and its flag carrier parent have made no secret of their ambitions for New Zealand.

A year ago, Qantas said it would shut down Jetstar Asia and redeploy more than a dozen jet aircraft to New Zealand and Australia. And in the six months to December 31, Jetstar lifted seat capacity from Auckland to Australia by 4%.

There have been setbacks. In September last year, Jetstar was fined $2.25 million for misleading nearly 100,000 customers about compensation rights.

The breaches were from 2022 to 2024 and the airline had claimed the Covid-19 pandemic caused it to lay off experienced workers, replacing them with inexperienced staff who gave flyers the wrong advice.

But the airline bounced back from that scandal, just nine days later launching its biggest-ever expansion of New Zealand and transtasman routes.

And last July, it ranked well in Cirium’s flight emissions review, placing sixth in the world and was the only airline based in Oceania to make the top 20.

But it still frequently trails Air New Zealand in punctuality, according to the Ministry of Transport.

In New Zealand, Jetstar operates between Auckland and Wellington, Christchurch, Dunedin and Queenstown.

It also has routes between Wellington and Christchurch and Queenstown.

From New Zealand airports, it operates 13 transtasman flights, with the Gold Coast a prominent destination, and a service between Auckland and Rarotonga.

Jetstar flies between Hamilton and Christchurch and is linked to Sydney and the Gold Coast. Tully said the Waikato city was succeeding.

“A lot of people moved down that way during Covid but also it’s another way for Australians to get into New Zealand very close to Auckland. Hamilton’s been doing really well, as has Dunedin. We wanted to explore these options as new growth for both sides, for tourism and for business.”

The airlines flies Dunedin-Gold Coast return three times a week.

Some low-cost carriers have faced major problems overseas lately.

Just two weeks after Germany’s Lufthansa shut down its budget CityLine carrier, US budget operator Spirit Airlines collapsed last month.

And ultra-low-cost American carrier Allegiant Air reportedly planned to cut 61 routes and seven airports this year.

But the market in the Anzac countries was not so congested.

“We definitely see ourselves as very clearly a low-fares carrier. We’re not trying to be anything other than that in both New Zealand and Australia,” Tully said.

“And the reality is, in both those countries, we are the only low-fares carrier that operates. And airline industries rely on supply equaling demand and vice versa, and a market can sustain the carriers where that happens.

“But what we also see with Jetstar, just because the prices are so low, people are choosing to fly versus take a bus or take a train and you can open up new demand because your offering is so affordable.”

The chief executive, who calls Sydney home, catches frequent flights to Melbourne, where the airline is headquartered.

She said many of these Jetstar flights had first-time flyers, thanks to low fares, and she wanted the carrier to keep innovating to keep those prices low.

The global aircraft backlog is an issue for many airlines. Airbus and Boeing backlogs combined exceeded 15,000 aircraft and a value of US$1.25 trillion ($2.18t) in the first quarter. Delayed deliveries can mean older fleets, and older aircraft can need more maintenance, costing time and money.

“We got in earlier on the whole ordering of aircraft. We actually ordered a number of aircraft during the Covid period and so Jetstar’s already had 25 new planes in the last few years and they’ve been such an important part of the success we’ve had,” Tully said.

The airline operates Boeing 787-8 Dreamliners and a variety of Airbus A320s and closely-related A321s.

The Qantas group moved quickly after Covid and border closures to grow, ordering two dozen more widebody aircraft. By mid-2023 it had increased domestic capacity beyond pre-Covid levels.

Meanwhile, the Kiwi carrier was hobbled wih engine issues after problems with Rolls-Royce Trent 1000s on Dreamliners and Pratt & Whitney PW1100G engines on its A320 family members.

Tully said supply chain issues were still affecting OEMs (original equipment manufacturers) but with some airlines flying less often to manage high fuel prices, “you might see some of that ordering toned down a bit”.

The airline was looking forward to getting new A321XLR aircraft from the top-selling A320 narrowbody family.

“They’ll be able to go places in Asia directly from Australia that you haven’t been able to reach on a narrowbody before ... So we’re really excited about that.”

Airbus has said the XLR had up to 18% more range than the A321neo, and was less noisy and more fuel-efficient than its forerunner.

Stablemate Qantas started taking bookings last September for flights on its first Airbus A321XLRs, for Sydney-Melbourne and Sydney-Perth routes.

A contentious issue in aviation is whether governments should support regional routes.

“That’s a question for the New Zealand Government. I will say that when Jetstar flew on those routes for a period of time, it was tough. You have a unique system over there where you’ve got an airline that’s owned by Government,” she said, referring to the taxpayer’s 51% stake in Air New Zealand.

Qantas is a fully publicly listed and traded company, although by law, Australian shareholders must own at least 51%.

“Ultimately you want to build an environment where airlines can sustain themselves, ideally,” Tully said. “But you’ve got to set up a structure that supports that. Whether there’s a case for that or not, I’m not sure.”

Airlines are also engaged in ongoing wrangling with air traffic control agencies, airports, and others in the system about charges imposed on carriers.

“Across the airline system you’ve got an operating environment where you’ve obviously got a lot of Government costs and charges. And one of the things we’re also doing in New Zealand is talking to the New Zealand Government, like we do on this side of the Tasman ... about how we make aviation sustainable and make sure that we can grow our model, which is low-fare.”

Tully is adamant Jetstar will keep competing against Air New Zealand, and offer much lower prices on routes where they go head-to-head.

“New Zealanders deserve a second option, and we’ve seen this sort of growing affection for us and loyalty even for us. We get we’re the smaller player. We’re not the national carrier, but we think New Zealanders genuinely deserve an option to travel in a different way, and that is what Jetstar’s trying to do.

“We won’t have the same breadth, but we want to have enough of a presence and be able to compete and really give New Zealanders an option. And what I keep hearing when I’m there, and I’ve been over a lot in the last couple of years, is just that New Zealanders are really appreciating it.”

Domestic economies in both nations have hardly been stellar in recent months.

But Tully said demand in Australia was resilient, especially from leisure travellers, and demand in New Zealand was robust too.

“We would love it to be stronger ... because for New Zealand to have a strong tourism industry is just so important. It’s your second-biggest industry, and I think we’re passionate about trying to restore that because New Zealand actually never got back to pre-Covid levels of travel.

“So we’ve got to do everything we can to get that back. I think it’s so important to New Zealand.”

-A previous version of this story said Jetstar did not fly from Hamilton to New Zealand destinations. Jetstar has direct daily Hamilton-Christchurch return flights.

John Weekes is a business journalist covering aviation. He previously covered consumer affairs, crime, politics and courts.