Air NZ Dreamliner could mean cheaper fares

Photo / Leo Dejillas

Carrier is the launch customer for latest version of the high-tech plane tested yesterday.

Air New Zealand could have scope to drop fares on long-haul routes to fend off competition when its fuel-efficient Boeing 787 Dreamliners come into service, an analyst says.

Boeing yesterday for the first time flew the stretched version of the 787, for which Air New Zealand is the launch customer.

The planemaker described the five-hour test flight from its Seattle base as close to flawless and the aircraft will now go through air and ground testing to gain certification.

Air New Zealand expects big commercial gains from the 787-9, the first of which it is due around the middle of next year. It will use it to replace older planes flying to Asia, Western Australia and holiday destinations in the Pacific.

The head of private wealth research at Forsyth Barr, Rob Mercer, said Air New Zealand would have got significant discounts as a launch customer when it ordered the planes almost a decade ago.

"When they put these orders in place other airlines were not buying planes and discounts were quite hefty. Subsequently orders flew in for the Dreamliner but at a significantly higher price," he said.

List prices are around $300 million for the 787-9, which is 20 per cent more fuel efficient than older similar-sized planes and Air New Zealand would get an advantage over rivals, even if for a relatively short time.

"The advantage is the cost of capital and the operational improvement. You should see better pricing on long-haul routes because 60 per cent of a 12-hour journey is in fuel.

"With smaller aircraft you can offer more frequency and more depth," Mercer said.

The 787-9 can carry up to 290 passengers, compared with the airline's Boeing 777s with 332 passengers and up to 379 on the 747.

Mercer said Air New Zealand could look to offer greater frequency on popular long-haul routes.

"When you bring the passenger numbers down and offer more frequency with a lower price then that's a fairly powerful driver of tourism."

The airline will release details of the cabin configuration in November but it will have business premier, premium economy and economy seating, including Skycouch seats.

Boeing's head of 787 development, Mark Jenks, said the test flight was "about as close to a flawless first flight as I could have imagined".

Although the overall Dreamliner programme fell years behind schedule, Boeing has set more realistic targets for the 787-9 and has been meeting them.

The 787-9 fuselage is 6m longer than the earlier model 787-8 and it can fly an additional 300 nautical miles (555km) with a range of flying up to 15,000km, which would open up the possibility of flying into Brazil, India or deep into the United States.

Outsourcing delays and design problems set the Dreamliner programme back three years and battery fires led to the grounding this year of the 50-strong fleet around the world for three months.

Air New Zealand, which returned a $182 million profit in the last financial year, is 73 per cent owned by the Government, which says it could sell part of its stake in its asset sales programme before Christmas. The airline's shares closed nearly 2 per cent higher at $1.39 yesterday.