Tourism Benefits
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PUBLIC VERSION CHAPTER 11 TOURISM BENEFITS 1376430V5:AKR i PUBLIC VERSION TABLE OF CONTENTS INTRODUCTION ...........................................................................................................................................1 EXPANSION OF NEW ZEALAND TOURISM...........................................................................................2 INTRODUCTION...............................................................................................................................................2 AIR NEW ZEALAND’S ENHANCED CAPABILITIES.............................................................................................4 Network .....................................................................................................................................................4 Australia .................................................................................................................................................................4 Dual Destination Passengers ..................................................................................................................................5 UK..........................................................................................................................................................................5 Continental Europe.................................................................................................................................................5 IT Systems .................................................................................................................................................5 Current Air New Zealand systems..........................................................................................................................5 Previous attempts to establish a better system........................................................................................................6 Improvements available with QH...........................................................................................................................6 Distribution ...............................................................................................................................................7 Summary of impact of Air New Zealand’s enhanced capabilities on tourist numbers..............................7 QANTAS’ INCENTIVES TO EXPAND NEW ZEALAND TOURISM..........................................................................8 Qantas’ and QH’s incentives under the Counterfactual ...........................................................................8 Incentive to sell Air New Zealand product.............................................................................................................8 Incentive to market New Zealand as a destination .................................................................................................8 Qantas’ and QH’s incentives under the Factual.......................................................................................9 QH’S ABILITY TO EXPAND NEW ZEALAND TOURISM ....................................................................................10 Access to Air New Zealand Holidays Brand ...........................................................................................10 Access to Air New Zealand network........................................................................................................11 The QH plan............................................................................................................................................13 Australia ...............................................................................................................................................................14 UK and Ireland.....................................................................................................................................................15 USA and Canada ..................................................................................................................................................16 Japan.....................................................................................................................................................................17 Asia (excluding Japan) .........................................................................................................................................17 Continental Europe...............................................................................................................................................18 Response to specific questions by the Commission relating to QH’s promotion of New Zealand tourism .................................................................................................................................................................19 How effective will Qantas Holidays be in promoting New Zealand as a tourist destination? ..............................19 Is the target of 50,000 additional inbound tourists reasonable?............................................................................20 Test 1 - Package Sales .....................................................................................................................................20 Test 2 - QH market penetration .......................................................................................................................21 Test 3 - Sales outlets........................................................................................................................................21 To what extent would QH’s initiatives increase demand as opposed to taking share from other providers? .......22 Is the increase in dual destination tourism attainable?..........................................................................................23 Would dual destination marketing provoke a competitive response from Australian state tourism bodies? ........23 Would there be a strategic response by other competitors to the campaign to increase tourism to New Zealand? ..............................................................................................................................................................................24 Why is the market opportunity not already being exploited? ...............................................................................24 Can national tourist organisations and airlines promote national tourism effectively?.........................................25 Qantas – Aerolineas Argentinas Codeshare.....................................................................................................26 Air New Zealand’s withdrawal from Germany ...............................................................................................27 Air New Zealand – JL .....................................................................................................................................27 United – Lufthansa revenue sharing CHI-FRA ...............................................................................................27 Does the increase in tourist numbers take account of risk? ..................................................................................27 Would there be sufficient air capacity and tourism infrastructure to cater for the 50,000 additional tourists?.....28 Summary of QH’s enhanced ability to expand New Zealand tourism.....................................................28 IMPROVED PROMOTIONAL EFFECTIVENESS AND LEVELS...............................................................................28 Estimated increase in promotional effectiveness ....................................................................................28 Effect of rivalrous promotion on market expansion ................................................................................29 Informational versus persuasive advertising.........................................................................................................29 Search goods versus experience goods.................................................................................................................30 Conclusions ..........................................................................................................................................................30 Promotional elasticity estimates .............................................................................................................31 The use of RPKs as the dependent variable ............................................................................................31 Summary of enhanced promotional effectiveness....................................................................................33 OTHER FACTORS THAT WILL INCREASE TOURISM DEMAND...........................................................................33 1376430V5:AKR i PUBLIC VERSION Capacity Management ............................................................................................................................33 Improved Marketing Effectiveness of Independent Wholesalers.............................................................33 Prominence in Global Reservations Distribution Systems......................................................................33 South America.........................................................................................................................................34 CAPACITY AND FARE CHANGES ....................................................................................................................34