The Front Page: Air New Zealand's headache - and why it's good for customers

Front Page Podcast Host·NZ Herald·

14 Sep, 2022 05:00 PM3 mins to read

Air New Zealand faces a commercial fight as international travel returns. Photo / NZME

Relaxed border restrictions have given Air New Zealand the confidence to once again reopen many international routes.

But the local carrier isn't only the airline setting its sights on local skies.

The response from international airlines has been swift, with Hawaiian Airlines, American Airlines and Qantas all looking to get a cut of the New Zealand travel market.

"We're going to see a range of airlines come back," NZ Herald aviation reporter Grant Bradley tells the Front Page podcast.

"United and Air Canada are also coming back for summer, and American Airlines will be flying daily to Dallas Fort Worth from Auckland. That's quite an aggressive play by the biggest airline in the world and a bit of a headache for Air New Zealand."

American Airlines has come into the market with attractive pricing, turning up the competitive heat on Air New Zealand.

"Air New Zealand may also feel a bit bushwhacked by Qantas announcing that they are going to fly from Auckland to New York non-stop from the middle of next year. That's a direct threat on what has become Air New Zealand's flagship route."

This news comes with Air New Zealand set to resume flights between Auckland and New York this weekend.

That was good news for consumers because as competition returns, there were signs of pricing coming down.

It will still be some time before prices near the levels they were before the pandemic, but airlines are motivated to start making up some of the ground lost over the last three years.

Air New Zealand recently reported losses of $725 million, a reminder of the heavy impact of the pandemic on its business.

"It's been devastating, especially since they were tracking along strongly before the pandemic hit, " says Bradley.

"But, while airlines do tend to burn through money fairly quickly in bad times, they can earn very, very quickly when they bounce back."

Bradley points to the fact that Air New Zealand was able to recover from near-collapse in 2001 fairly quickly, in spite of competition.

"Air New Zealand has a very strong position in New Zealand. They dominate domestic travel, which is quite lucrative, with about 80 per cent of that market. And pre-pandemic they were flying about 40 per cent of long-haul international passengers into New Zealand."

With numerous international airlines pushing hard for a bigger cut of the pie, time will tell whether Air New Zealand is able to reassert its dominant position in the local market.

Meanwhile, customers can look forward to the deals that emerge from that commercial battle.