Kiwijet Will Stay The Course
Kiwijet Will Stay The Course
May 28, 2008 Christchurch, New Zealand: The Kiwijet Airline Company will stay the course, with development of domestic services at least until year’s end. A statement from Chief Executive Officer Patrick Weil.
“Today aviation is facing its worst crisis since the terrorist attacks of September 11, 2001 as the price of oil skyrockets, airlines across the globe are in a tailspin. This trend will continue at least until the US presidential election takes place in November.
It is my opinion that the surge on oil is largely based on the uncertainty of what direction the American government will take. I believe that the oil share market bubble will burst shortly after America elects its next president. We must keep in mind that the global price of oil is entirely based on the US dollar, and that mostly futures speculators have creates this situation. Our analysts expect oil to top out at US $ 161.00 per barrel by December, and depending on the outcome of the election should begin to fall sharply to around US $100.00 per barrel by January 2008. Doom and gloom predictions of US $200 per barrel oil are in my opinion highly exaggerated.
Provided this forecast remains accurate then Kiwijet will move foreword with our plans. We have secured funding to carry us through the next six months, and we have completed our operations manual programme. However we will hold back from applying with the NZCAA for certification until we see a sharp fall in oil prices. If oil falls in the fourth quarter as we expect we will be in a much better position to take advantage of rock bottom aircraft lease rates. We estimate that a large number of British Aerospace RJ-100’s will be readily available due to the downturn, and downsizing including an expected number of airline failures during the next six months.
Normally I would not take a stand with the national carrier on an issue, but in this case I must. The national carrier of New Zealand plays an integral part of the social and economic landscape of New Zealand, and the industrial actions taken by the Engineering Printers and Manufacturing Union as well as The Aviation and Marine Engineers Association could mean the loss of over one thousand high paying engineering jobs in New Zealand. This is the wrong time to take such an action since the result will be that those jobs will most likely be lost, and that engineering work will be contracted out to countries like China. Rest assured that the national carrier will do whatever it takes to protect and maintain its operations without disruption in the volatile times ahead.
A similar situation will cause the collapse of Italy’s national airline Alitalia in the coming weeks although this has been in the making for the past ten years. It’s just a reminder that an airline with the same scope as the national carrier can find it’s self near collapse due to labour unions, and unrealistic demands made on it especially in difficult times. Union members need to realize that they are playing Russian roulette with their livelihood, and the prospects of getting new overhaul contracts is slim for the national carrier at this time.
In the meantime I have been able to keep our investors in place for the time being as a result of a spike in domestic tourism in New Zealand. In 2007 Tourism New Zealand showed that 7. 6 Billion NZ Dollars were spent on domestic travel up 1.6 % from 2006. We expect that number to remain flat in 2008 as New Zealanders deal with high petrol prices that reached NZ $2.00 per liter last week.
Looking forward I expect at least 20 carriers will file for bankruptcy within the next six months, and M & A activity will increase among the legacy airlines for the rest of the year. If the price of oil continues to climb past the end of the year we will withdraw our plans to launch Kiwijet. My hope is that it will not come to that but it would be just foolish to launch an airline in such dire circumstances.
I will have an opportunity to address The World Low Cost Airlines Congress in London on September 26th 2008.
Currently I am in Los Angeles for the winter to work
with the motion picture industry as a consultant for
aviation related film projects.
The film industry is recession proof, but not the airline industry. We will have to wait and see what happens from now until November.
remain committed to the project, and I would like to thank
our many supporters for their continued support of
Soon all Kiwis’ will fly…