New York is a big prize for Qantas and Air NZ. Photo / Supplied
When Qantas flight QF3 takes off from Auckland bound for New York on June 14, rivalry with Air New Zealand is being taken to a new frontier.
The two carriers will go head to head on one of the world’s longest flight – rare among airlines which usually have the very longest routes to themselves.
While they compete on the Tasman, the three-times-a-week New York flights take that to a whole new level. But both are confident there’s room for both with the US market running especially strong amid the strong rebound for travel.
Qantas’ New York announcement came shortly before Air NZ started its flagship route in September last year. While the Kiwi carrier has had a nine-month headstart, Qantas has since raised the stakes. It has announced it will add a fourth weekly flight from the end of October further turning up the heat on the route as it builds its international network back to 100 per cent of pre-Covid capacity by March next year.
Air New Zealand is flying around 91 per cent of its pre-Covid international capacity and will soon add an eighth Boeing 777-300 but quitting its fleet of the older, less efficient 777-200s has affected its ability to meet surging demand.
Both airlines are enjoying record yields (profitability per seat) and instead of grim updates about slashing routes and staff numbers as during the first year of the pandemic, market updates are now positive with earnings upgrades coming thick and fast.
But the pandemic resulted in both airlines changing their North American plans. Air NZ had planned to launch New York flights in 2020 but had to put the brakes on and delay them for two years. Qantas rethought its North American strategy.
The airline had seen Air New Zealand tap into its customer base and flying them through Auckland to the US (the first booking for its non-stop Chicago service came from Australia) and its new New York service will help stem that loss of business.
Before Covid 19, Qantas used Los Angeles as its stopover to New York, but identified “significant advantages” to switching to Auckland as a stopover for flights that originate and end in Sydney.
Chief executive Alan Joyce said Auckland offered more connecting opportunities for Qantas than Los Angeles.
It allows for connections from more Australian cities such as Melbourne and Brisbane to connect to the flight in Auckland.
He also said that Qantas was not allowed to sell seats for the Los Angeles-New York domestic leg, but the airline had rights to sell tickets for Auckland-New York flights.
This in turn also allows dual destination inbound tourists who want to visit Australia and New Zealand.
The new Qantas flights come just as former Air NZ executive Cam Wallace moves into a new job, heading the Australian carrier’s international airline. It pits him directly against his employer of 20 years and where he was a contender for the top job. Air NZ chief executive Greg Foran – like all airline bosses – says he welcomes competition. He’s on good terms with Joyce and his successor Vanessa Hudson and has been in contact with Wallace.
“I think it’ll go absolutely fine. We’ve spoken as I do with Alan and Vanessa. We’re used to competition and here at Air New Zealand and he’ll know a little bit about us, but it’s also been three years since he’s been with us,” Foran told the Herald at the Trenz event in Christchurch.
“Qantas is a great competitor, we look forward to competing.”
An Air NZ spokeswoman this week said bookings on the New York route remain solid, particularly in the premium cab.
‘’New York is not only a popular destination for Kiwis and Australians, but it’s also a very large catchment area for passengers wanting to travel downunder, so there’s enough room for other airlines to compete in this market.’'
At 14,207km the route is the fifth longest flight in the world currently operating and comes with big operational challenges, especially into the strong jetstream winds when flying westbound. Since launch, Air NZ has operated more than 100 flights, which as the airline planned for, included three gas and go’s, (touching down in Nadi to top up fuel) and two flights with bags offloaded for payload management.
Qantas says it has learned from Air NZ’s experience on the route. The Australian airline has been planning the route for two years and has been working with its rival on some operational parts of the flight, particularly in relation to safety.
The doubling of flights has been welcomed by Tourism New Zealand.
Its chief executive, Rene de Monchy, said the ability to take a direct flight from New York meant the opening up of the east coast of the US, a priority market of big-spending visitors who tend to stay longer in this country than others.
“It’s where there’s a lot of, you know, high value, high-quality visitors in that part of the state,” he said.
Air New Zealand had led the charge and now the Qantas flights were very welcome.
“What it allows you to do is to promote to that region and say ‘it’s a single flight and you can come here and explore New Zealand’.”
While numbers from the New York area had surged, they so far reflected the relatively low capacity of just three flights a week.
In the six months from September to March, there were about 200,000 total arrivals from the US and of that under 9000 came from New York.
“But it does mean that you could set that up for future potential as well and really make it much easier for people who live in that New York State and New York City area to make a decision to come to New Zealand.”
He said he was hopeful that Qantas, by more than doubling capacity by the end of the year, would result in a proportionate increase in arrivals.
“It enables you to promote New Zealand as a destination to a different audience.”
He’s hopeful that competition would lead to a reduction in airfares.
“Competition is good for consumers and price. Having said that, six or seven times a week is still not that much capacity and I think there will probably be pretty strong demand in both directions for a period of time.”
While Tourism NZ preferred tourists to come to this country only – and spend all their holiday money here – dual destination visitors would be a positive spinoff from the Qantas services.
‘’We know that from lots of different parts of the world, they do like to go to Australia and New Zealand.’’
Chris Hunter, general manager NZ of Helloworld, believes there’s enough demand to support both airlines.
“In terms of the market capacity versus demand balance, I believe there is enough market demand to support both airlines well.”
However, it’s not only Auckland-New York that has attracted more capacity, and downward pressure on pricing. This coming summer, United Airlines, American Airlines and Delta (all three are global aviation giants in terms of revenue, assets value and market capitalisation) are flying more between Auckland and the US west coast and looking to also compete aggressively with a one-stop traffic option to the eastern seaboard.
“This should see pricing come under pressure across all cabin types and I would expect airfare benefits for both leisure and corporate travelers with lower pricing.”
General manager of leisure brands at Flight Centre NZ, Heidi Walker said the arrival of Qantas on the route should bring air fares down as competition intensified.
Flight Centre analysis shows that on average, from June through to August, Qantas is offering a more competitive fare. In June, a return sale airfare from Qantas is about 31 per cent cheaper compared to Air New Zealand.
Airfares increase in July for the school holidays and Northern Hemisphere summer but during this period, Qantas remains cheaper, on average.
A snapshot of prices on airlines’ websites is just that: It doesn’t take into account whether they are down to selling the last few seats on any given day - always the more expensive option. But a sample taken earlier this week showed that a return trip in Economy on Air NZ at the end of June costs $3834, while in Business it is $17,054.
On Qantas around the same time an Economy trip is significantly less at $2918 and closes in Business at $16,828, where last week cheaper saver fares had sold out.
New Zealand travellers typically book long-haul flights three months out and at the end of August Air NZ Economy return is $2368 while Business stays at more $17,054. Qantas is offering Economy fares from $2143 and at the front of the plane is much less pricey; Business is at $12,733.
Walker said travellers often made their choice based on which loyalty scheme they belong to. Air NZ’s has about 3.5 million members while Qantas has about 15 million.
“Air New Zealand has got such a huge loyalty base here.”
With two quality airlines competing, it was possible some customers would cross over to a new one.
“There are going to be some decisions that are made on price. There might be some people who haven’t travelled with Qantas before, that [usually] travel with Air New Zealand and vice versa,” she says.
In the first five months of this year, bookings to New York through Flight Centre had doubled compared to the same time last year, reflecting border openings and the non-stop service. In spite of the unfavourable exchange rate, families are flocking to New York.
“We’re also seeing families staying longer with the average booking just under two weeks, an increase of 13 per cent. With airfares still tracking above pre-Covid levels, our travellers are under the opinion if you’re going to invest in airfares, you might as well stay for a reasonable period of time,” said Walker.
Qantas brought Boeing 787 Dreamliners into its fleet after many other airlines but always had in mind ultra-long range (ULR) flying, its Perth-London flight being its longest and its Melbourne-Dallas fight also slightly longer than Auckland-New York. Its planes have 236 seats while the aircraft Air NZ uses on its longest flights have 275.
In Business class the airlines offer a much different “hard product” - seats and other parts of the interior.
Air NZ’s outdated herringbone layout offers little privacy and means passengers have to twist to see out of windows. It will be replaced late next year when the airline gets new Dreamliners and will remodel the 14 planes in its fleet.
Qantas’ Business class seats are more conventional, roomier and offer more privacy.
The seats in its Dreamliner Business class are almost identical to those on the A330s the airline operates across the Tasman.
Its Dreamliners are premium-rich, with 42 seats in Business class (where airlines enjoy the highest yields) compared to 27 in Business class on Air NZ’s long-range planes.
When Air New Zealand unveiled planned new seats and interiors last year it acknowledged there had been some harsh feedback about existing cabins which left crew to “do the heavy lifting” and ceded an advantage to competitors.
Helloworld’s Hunter says airline product is worthy of careful consumer consideration.
“It should be noted that the newer version of the aircraft that Air New Zealand has on order – due to arrive in 2024 – would be a better fit for the route, as they have fewer seats overall [227] and have been optimised for ultra-long-range flying.”
For Economy and Premium Economy there will be an option of paying between $400 and $600 for a three-hour spell in its six-berth Skynest sleeping pod.
Hunter says Qantas has “seriously committed” to the New Zealand market with the soon-to-be four-times weekly New York service through the Auckland hub using new 787 Dreamliners.
This includes connectivity in Auckland for Australian-based guests on to the Auckland-New York service and new onboard products including Rebecca Vallance-designed pyjamas and new onboard menus, launched in Sydney on Wednesday. Air New Zealand has also introduced fresh new amenity kits with skincare products from Aotea.
Air NZ offers Wi-Fi on its New York flights, Qantas doesn’t.
But the Australian airline offers a more generous complimentary baggage allowance, except in Business. Qantas allows one bag at 32kg in Economy, two bags up to 32kg in Premium Economy and Business (although high-tier frequent fliers are allowed more). Air NZ allows one 23kg bag in Economy, two bags up to 23kg in Premium Economy and three bags up to 23kg in Business.
Qantas is upgrading its Auckland lounge and expanding it by 40 per cent. While in Auckland Air NZ has the home-ground advantage now with its lounge in Auckland, it is a different story at New York’s JFK Airport.
Qantas Business class passengers and elite flyers will have the choice of three new lounges in Terminal 8, operated by Oneworld partners American Airlines and British Airways. Air New Zealand uses Terminal 1 at JFK where eligible passengers can use the lounge of Star Alliance partner Lufthansa which Australia-based Executive Traveller describes as “decidedly average in food, drink and décor”.
Qantas QF3/QF4 (from June 14)
Air New Zealand NZ1/NZ2
One route had three times the average rate of cancellations.