Air Niugini says the loss of a codeshare agreement with Qantas is behind the decision to end Port Moresby-Townsville flights and reduce services to Sydney.
The airline announced on Friday it will drop nonstop services to Townsville service and cut Sydney from three to two flights a week from October 1.
Air Niugini acting chief executive Tahawar Durrani said the recent ruling from the Australian International Air Services Commission (IASC) was behind the changes to its Australia network.
“The decision by the Australian Government regulator, the International Air Services Commission, to disapprove the Qantas application to code share on Air Niugini’s innovative direct services to Townsville and Sydney, thereby denying customers a choice of marketing airline on these developmental and marginal flights, is one factor in the airline’s decision to suspend services to Townsville, and reduce Sydney flights to twice weekly,” Durrani said in a statement on August 16.
Proposed codeshare knocked back in May
In February, Qantas applied to the IASC to continue an existing codeshare agreement with Air Niugini where the two carriers codeshare on the Sydney-Port Moresby route (operated by Air Niugini) and the Brisbane-Port Moresby route (operated by both Qantas and Air Niugini).
The application also requested approval to add Qantas’s QF code on Air Niugini’s nonstop Cairns-Port Moresby and Townsville-Port Moresby services.
However, the IASC said in a draft ruling in early May it proposed to reject the airline’s application after considering it “would not be of benefit to the public”.
“The Commission’s finding is that Qantas’s proposed free-sale codeshare arrangement with Air Niugini would reduce competition by increasing barriers to entry on the city pairs served only by Air Niugini (Cairns-Port Moresby, Sydney-Port Moresby, Townsville-Port Moresby) and by risking the withdrawal of Virgin Australia from the Brisbane-Port Moresby sector, where both Qantas and Air Niugini offer parallel services,” the IASC draft determination said.
The Qantas application was vigorously opposed by Virgin Australia, which is the only other airline offering nonstop flights between Australia and PNG.
Virgin Australia said in its submission to the IASC the proposed codeshare was the “single most significant barrier to entry on the PNG route”.
Qantas withdrew its application for the expanded codeshare in response to the IASC decision.
Townsville flights lasted about 18 months
Air Niugini began twice weekly nonstop flights from its Port Moresby hub to Townsville in April 2017. While the inaugural flight was operated with Boeing 737-800, Air Niugini has been serving Townsville with 80-seat Fokker 70 equipment.
Chief analyst at aviation thinktank CAPA – Centre for Aviation Brendan Sobie said a Qantas codeshare may not have been enough to sustain the Townsville flights, which has achieved load factors of less than 50 per cent since commencing.
Sobie also questioned the IASC decision to knock back the proposed expanded codeshare.
“The Townsville market is small and has a limited Qantas presence,” Sobie told Australian Aviation.
“Qantas would not likely have sold a significant number of Townsville-Port Moresby tickets and provided enough additional passengers to make the route viable.
“However, Air Niugini and Townsville Airport were understandably disappointed by the IASC decision.
“While rejecting the proposed codeshare in the larger markets may have some merit, IASC’s rejection of the proposed Qantas codeshare on Townsville-Port Moresby made little sense because there is no way the route could potentially support two operating airlines.”
Townsville Airport to be without international flights from October
Air Niugini’s Port Moresby flight was Townsville Airport’s only international route. Jetstar ended its flights to Bali in March.
That means Townsville Airport will be without any international flights from October, the same position as it was in three years ago.
“Townsville will obviously be keen to fill the void in the international market left by Jetstar and now Air Niugini,” Sobie said.
“While it will be difficult to attract another airline to serve Port Moresby, Townsville could potentially attract another airline for Bali given the route’s relatively decent performance.
“Townsville could also potentially attract a route to Asia or New Zealand. AirAsia X has previously looked at serving Townsville from Kuala Lumpur using its A330 fleet. A 737 MAX 8 service from Singapore by SilkAir would also be an option – and perhaps more viable given that Townsville would likely struggle to support a widebody given its relatively small size.”
In addition to changes to Townsville and Sydney, Air Niugini also announced service reductions to Nadi, Port Vila and Tokyo Narita, as well as the end of flights to Bali.
It said these reductions and suspensions of international routes would be reviewed in 2019.
“The above changes mean Air Niugini can redirect aircraft resources, and especially crew, onto our core domestic network,” Durrani said.
“This necessary review forms a key part of adjusting our business model because as demand and global conditions change, we must be prepared embrace these changes and make sometimes difficult decisions to adapt our business as well.
“Overall, the global airline industry is facing up to the challenges of rising oil prices and other costs, and in Air Niugini’s case we continue to enjoy and appreciate strong patronage from our local and international customers.”
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