Air NZ jumbo refits to cost $160m

By CHRIS DANIELS aviation writer

Air New Zealand says the cost of upgrading its fleet of eight Boeing 747-400 jumbo jets with new seats and television screens will be $20 million a plane.

The airline is increasingly faced with competition from airlines with better seats and inflight entertainment options and some in the industry feel Air NZ has already "missed a generation" of product development by not installing seat-back television screens in its economy class seats.

It is now competing on transtasman routes with airlines such as Emirates, which flies a new Airbus A340-500 aircraft, where passengers in first, business and economy have access to around 500 channels of movies, music and computer games.

Chief executive Ralph Norris told a conference in Australia this week that the fleet refit would cost $160 million. Previous estimates went as high as $200 million.

Money for the upgrade will come from Air NZ's operating cashflow.

Air NZ has eight 747-400 aircraft in its fleet, four leased and four it owns. Refitting a leased aircraft and so increasing its value to the owner, would mean Air NZ gets better terms for the rest of the lease.

The refits would take around a month and involve pulling out floor and wall panels, rewiring huge sections of the aircraft and installing new seat tracks and electronics. Putting new electrical systems in aircraft means a lot of careful work on safety issues.

Norris admitted that the airline's long-haul "product" was "starting to look tired".

Once finished, the planes would have new economy seats, lie-flat beds in the "premium cabin", new in-flight entertainment and "a new look" for flight attendants and customer service workers.

He said the changes would "bring our long-haul offering on par with and in many cases ahead of our peers".

Norris' reference to the "premium cabin" raises the possibility that first class will be removed from the Air NZ 747-400 fleet. On its main 747-400 route between Auckland and North America, Air NZ has only Qantas competing on the non-stop flights. Qantas has axed its first class service from this route, instead extending its business class cabin and providing lie-flat seats.

While $20 million to refit one plane may seem expensive, it is not much when seen in the context of the price of new planes.

Boeing lists the "sticker prices" of new 747-400 aircraft at between US$185 million and US$211 million each ($277.4 million to $316 million).

Air NZ's own team of engineers would be prime candidates for doing the refurbishment work, as they have already won contracts to do similar work for other airlines. Last year, they refitted in-flight entertainment equipment and upgraded the interiors of 10 Qantas 747s.