Gloves off as American heavy hitter flies into town

Although the US airline is supplying the metal, this American Airlines move is very much a Oneworld alliance proposition. Photo / Getty Images

Make no mistake; the gloves are definitely off again in the trans-tasman battle between Air New Zealand and Qantas, which now has the biggest airline in the world to do some heavy hitting.

There was a bit of good humoured japery over Rugby World Cup bets resulting in Qantas staff having to wear All Black supporters kit across the Tasman (although it wasn't such a hardship - that part of the Australian airline is registered here and crewed mainly by Kiwis) but confirmation of reports in the Herald that American Airlines will fly from Auckland to Los Angeles restores normal service in the trans-tasman rivalry.

Although the US airline is supplying "the metal" - in this case a near new Boeing 787- to fly across the Pacific this is very much a Oneworld alliance proposition - Qantas is a driving force. It fits with the Australian airline's aggressive stance here in New Zealand and now in American Airlines - the world's largest carrier by traffic - it has giant ally.

As American Airlines chief executive Doug Parker says his airline wouldn't have been heading here without the support of Qantas and its chief executive Alan Joyce. Parker says there is room for both Air New Zealand and American - most of his customers will come from the US among its 100 million frequent fliers.

But direct flights to the US have been Air New Zealand's domain for the last three years. There are more indirect flights now but as one analyst has said every day Air New Zealand has the direct route to itself is a good day for Air New Zealand.

Even signals by American that is interested in New Zealand have sent the Air New Zealand share price reeling, a reaction that is probably overdone.

Air New Zealand is also in record profit territory, growing its longhaul services quickly and in good shape to respond to a competitive threat.

Qantas subsidiary Jetstar is about to challenge Air New Zealand in another part of what has been its territory for longer - regional routes that can at worst be big money losers and at best, lucrative. Joyce said with its growing network through Jetstar in New Zealand, there will be a link from Dunedin to Disneyland.

Qantas was in dire financial straits two years ago but has enjoyed a remarkable turnaround thanks long overdue restructuring of its long-haul operation (now back in growth mode) and much cheaper fuel.

The same goes for American Airlines - in even worse shape 18 months ago, but now reporting record profits so is retooling its fleet and is on the expansion trail as well.

Air New Zealand is also in record profit territory, growing its longhaul services quickly and in good shape to respond to a competitive threat.

As chief executive Christopher Luxon has said on the back of impregnability at Eden Park, "we don't lose to Aussies at home.''

It will be a tough scrap with an outcome difficult to predict. But with Air New Zealand slashing some fares to below $500 already there's one guaranteed winner -the traveller.

It dropped fares sharply and quickly on regional routes and will pour more brand new aircraft into the regions during the next five years - showing it will not give up without a fight.
The same has happened already in the face of competition across the Pacific. Its own deepening alliance with United Airlines will help and expect fares will continue to come down sharply at times.

Airlines from the US have been in the New Zealand market from time to time and for different reasons come, then gone. American's alliance with a powerful player in Qantas will allow it to put down stronger roots and it now has better, more efficient planes.

It will be a tough scrap with an outcome difficult to predict. But with Air New Zealand slashing some fares to below $500 already there's one guaranteed winner -the traveller.