Executive director of Board of Airline Representatives Cath O'Brien. Photo / Dean Purcell.
The new voice of the airline industry in New Zealand has a message for air travellers this Christmas: Be prepared - it’s going to be busy.
Cath O’Brien is the executive director of the Board of Airline Representatives and also has advice for travellers wanting the lowest possible fares next year.
“One hundred per cent book as soon as you can. Book as far out as possible because at the moment the settings for the New Zealand market are for capacity constraints and that’s going to cause higher prices.”
Those prices are registering strongly in CPI data. Latest inflation figures showed a 20 per cent surge paid in New Zealand for domestic and international flights in the latest quarter.
The board represents nearly all airlines operating in New Zealand and earlier this year warned that delays in reopening borders, or at least laying out a clear plan, compared to other countries, would lead to planes going elsewhere.
“To be fair it probably has [happened]. The New Zealand market was slower to open than most and so as countries opened up airlines deployed aircraft to markets that were open,” says O’Brien.
Aotearoa is at the end of what are long routes, thin with passengers. Pre-Covid they were riskier than routes that are shorter connecting big population centres at either end. This risk has been exacerbated in as airlines look for the most lucrative places to operate their aircraft.
“New Zealand came along later in the piece and those airlines had already deployed their assets so we’ve been last at the feast. We’ve had to take what was left at the table.”
‘’New Zealand came along later in the piece and those airlines had already deployed their assets so we’ve been last at the feast. We’ve had to take what was left at the table.’’
Airlines desperate to rebuild balance sheets have put planes on routes that were a safer bet. “If they’re successfully operating why would they move them?’’
International capacity in New Zealand will peak at 70 per cent of pre-Covid levels this summer, before falling away again during the winter low season. This reduced number of services comes as demand for travel hits record highs. People were prepared to pay almost any price, said O’Brien.
“High fares are a product of the settings that we have, supply and demand.”
Airlines plan months ahead and have locked in schedules until the end of next October. They fix seasonal operations far in advance around airport slots and Government regulations.
Most of the airlines flying here before Covid hit were back but nearly all with reduced capacity, with Air Canada a notable exception, coming back with bigger planes and greater frequency between Auckland and Vancouver. During the pandemic Thai Airways, Philippine Airlines and Samoa Air had stopped flying here and not returned and at this stage there is no sign of any new airline arriving.
International capacity had also been badly hit because Chinese mainland carriers (China Southern and China Eastern) were flying just very limited cargo and passenger flights as their home country continued with its tight border restrictions in pursuit of its Covid-zero policy.
O’Brien was most recently head of regulatory affairs at Air New Zealand and says the industry wants international connectivity to return to its pre-Covid levels.
“But the caution is that the world we knew in 2019 is over now. We have a new one and we’re designing that now to see what it looks like.”
She says connectivity may never return to exactly what it was before, markets and dynamics have changed.
“New Zealand has to work to restore its international capacity. We have to really make sure that New Zealand is on the map for foreign carriers particularly.”
The Tasman, crucial for tourism and the visiting friends and family (VFR) market was operating at around 80 per cent capacity over summer. Some passengers are facing one-way economy fares of more than $1100.
And there is even more demand for seats out of New Zealand because some passengers were connecting to flights out of Australia to other places that previously could be reached directly from this country.
“There’s a real risk of isolation for New Zealand . . . that we start to rely on points of connection, hub trafficking to get beyond New Zealand.”
Coming into Christmas an already stretched aviation system, hit by ongoing labour shortages, will face even more pressure.
It was the first Christmas since 2019 that New Zealanders have been able to travel overseas and reconnect with family and friends.
“It is going to be intense, it’s going to be congested and busy. Every plane is full. Pre-Covid planes were not 100 per cent full all of the time. It’s a real load on a new system.”
Travellers will encounter queues and she encouraged passengers travelling over peak periods to get to airports early and check what they’re packing, especially batteries. Lithium batteries can be carried in hand luggage but not bags that are checked in.
She also said processing time through Auckland International Airport is longer as the Ministry of Primary Industries is doing more checks and along with Customs are operating in a tight space as the arrivals hall work was delayed.
While demand is running hot with many airlines now bouncing back to run big operational profits, she is uncertain about how long this will continue.
It’s a real moment, having seen domestic lockdowns from her time at Air New Zealand - the surge of travel happening and then falling away again. This international demand feels a bit similar, O’Brien says.
“New Zealand has opened and people are travelling at almost at any price. That’s wonderful but I’m not sure how that will last.”
O’Brien went to Air New Zealand after 10 years at Vector. Before the pandemic hit, she was involved in policy around law changes and airport pricing. When Covid-19 hit her job changed almost overnight and was at the very front line of the crisis.
“It was pressured immediately. In my role I got the first pieces of news about border changes and lockdowns.”
She was the conduit from the Government and its agencies to the Air NZ executive as border closures, and lockdowns were imposed and then rules around vaccinations and opening up were brought in.
“All that was really difficult but it was incredibly reactive – we would get almost no notice of change and have to act really fast.”
Airline leaders and other staff were working around the clock to adapt and keep what they could running, “as quickly and as kindly” as they could.
When borders were shut staff passengers and planes were sometimes overseas and the airline had to deal with a complex range of responses in different countries. It was a once-in-a-career event for the married mother of four sons aged 11 to 19. During lockdowns she and her husband home-schooled the boys in their North Shore home.
Being on the front line at Air New Zealand “was the worst work I ever had to do but the best work I ever had the privilege of the opportunity to do.”
Airlines, now rebuilding, face different challenges.
“Now it’s not as frenetic, it’s a bit more paced and it’s possible to have a conversation about how to do something, how we might improve it and that is great.”
The experience of the pandemic at Air New Zealand helped her build a deep knowledge of different regulations in other countries, which she says was invaluable experience for her role at Barnz.
She says there is a lot that is the same about airlines - how they make decisions around routes, and how they manage capacity and resources such as ground handlers, cabin crew, and pilots.
“A lot of the building blocks of aviation are the same – what I’m learning is that each international carrier has a slightly different approach to the market and customer that they will work for. That is a bit to do with where they come from and their culture.”
Airlines all wanted the same thing from the Government, agencies and airports.
“We have to make sure we are attractive to foreign carriers, we have to make sure our airports are efficient, and it’s easy to get landing times that carriers want. We have to make sure that we have a market here that people want to come to.”
Because of sky-high fares, border levies and fees are making up a smaller proportion of ticket prices than before the pandemic but she warns that airlines are highly sensitive to price increases and dislike uncertainty.
“Airlines do care about that because it gets to the business case for a route being successful. What airlines like is predictability, when those charges are known allows them to forecast in advance.”
She went to Air New Zealand after a decade at Vector where she worked on regulations around power lines and gas pipes – a change of direction from her English and art history bachelor’s degree that led to a masters of art history.
But she says her academic background has helped in the often complex field of regulatory affairs.
“Arts degrees do give you the ability to research and write so a big part of job now is writing compelling stories and being able to find things out by yourself.”
While training as an economist may have been useful, she was always able to tap into specialists.
“Most things have to be understood by somebody and if you break it down into small enough pieces you can.”
She’s a big backer of arts degrees. “One of the problems at the moment is that people are driven to task-based learning and I understand that but there’s a real richness that you can get from an arts background.”
One route had three times the average rate of cancellations.