WELLINGTON — Budget airline Pacific Blue, part of the Richard Branson stable, announced Monday it was pulling out of the New Zealand domestic market, citing a lack of profitability.
The airline would instead redeploy its aircraft on to the trans-Tasman and medium haul international routes as part of a network review by the Australia-based Virgin Blue airlines group.
Virgin Blue chief executive officer John Borghetti said the company was adding capacity to routes with strong revenue potential and removing capacity from services which were underperforming.
Branson, who founded the Virgin Group, is president of Virgin Blue which is the 100 percent shareholder in Pacific Blue.
When Pacific Blue entered the New Zealand domestic market in 2007 it said it was a long-term commitment, but spokesman Phil Boeyen said it now had to concede the yields were not sustainable and the service would end in October.
“It’s very difficult to make money on flights that are cheaper than the cost of the taxi to the airport,” Boeyen said.
The airline said the end of the domestic service would increase New Zealand staff numbers as the focus on international flying meant up to 100 new jobs would be created.
Pacific Blue currently operates 106 flights a week between Auckland, Wellington, Christchurch, Queenstown and Dunedin.
Virgin Blue is already in talks with Air New Zealand to form a trans-Tasman alliance.
When the venture was announced in May both airlines said it was not a step towards either taking a shareholding in the other, but Air New Zealand has not ruled that out in the future.
The proposed alliance is awaiting regulatory approval with a decision expected before the end of the year.