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The big problem at Air NZ

Thursday 2 March 2023 | Written by Supplied | Published in National, Opinion, Travel


The big problem at Air NZ
Air New Zealand is calling for travellers to “keep calm and carry on” this holiday season. 23030117

Kiwis trying to book a trip to Rarotonga will be frustrated with reduced flights to Rarotonga. On many days the airline is now only flying one daytime flight from Auckland to the Cook Islands, which was an astonishing $1800 return when I tried to book for June this year, writes Brook Sabin of Stuff.

Air New Zealand has a problem few people are talking about.

During Covid-19, it had too many planes and not enough passengers. So, it took a big gamble and permanently grounded a big chunk of its long-haul fleet.

I’m talking about the 777-200ER. The airline used to have eight of these wide-body jets, which were used on Asian, Pacific, Australian and North American routes.

Fast-forward to 2023, and the airline has the opposite problem. Too many passengers, and not enough planes or crew to fly them.

It has just 21 wide-body jets left, down from 29 pre-Covid. That’s almost 30% fewer wide-body seats.

If you’ve recently booked an Air NZ ticket to Perth, this issue will be all too familiar. The airline is now so stretched for planes, it’s hired a Spanish airline (Wamos Air) to operate the Auckland to Perth route until October 2023. Onboard, guests are treated to Spanish crew and a completely different in-flight experience. It’s not ideal.

But the problems are wider than the Auckland to Perth route. Air NZ is down to just one Los Angeles flight a day at the moment, although it is building to twice a day, on some days, later this year. Before Covid, it was up to three times daily.

The big USA carriers are taking advantage of the reduction in flights, with newcomers like Delta Airlines launching its first-ever Los Angeles to Auckland service. Market share is up for grabs.

Air NZ has also dropped the Sydney to Rarotonga route, which has been picked up by Jetstar. On top of this, it’s stopped flying Rarotonga to Los Angeles, which has been replaced by Hawaiian Airlines, with connections through Honolulu.

Air NZ argues it’s dropping the flights to focus on 'what we do best' – but in the longer term, its Pacific dominance will suffer.

Kiwis trying to book a trip to Rarotonga will also be frustrated with reduced flights. On many days the airline is now only flying one daytime flight from Auckland to the Cook Islands, which was an astonishing $1800 return when I tried to book for June this year. The only cheaper option on the national carrier arrives at 1.50am in the morning. The return journey takes off at 3am. It’s all part of a new effort to get capacity back to the Cook Islands by using overnight flights (like Jetstar does).

Air NZ is not Jetstar, and it’s a pretty rough way to start and end a tropical holiday. It’s a far cry from the multiple daytime flights before Covid-19.

Air NZ has also rescheduled almost 2000 flights in 2023 as it tries to “build flex and certainty into our network.” The airline is clearly struggling to build back the frequency Kiwis expect with eight of its wide-body planes missing.

On top of all this, the airline will soon be facing a China issue, as Covid fears ease and Chinese tourists book trips to New Zealand. Air NZ will be under pressure to resume daily flights to Shanghai soon, but it’s going to need to find the aircraft to do that. Or, hand some of those passengers to rivals.

Yes, Air NZ is profitable again and that should be celebrated. But at what cost? Because long term it’s likely to lose market share on international routes, an effort which has taken decades to build up.

There’s also a much bigger issue at play. We’re (NZ) an isolated island nation where almost everyone comes by air. Our prosperity relies on having long-haul jets. And a smaller home-based international airline has a huge flow​-on effect for our economy longer term.

Some of Air NZ’s lost international capacity will be picked up by foreign airlines, which isn’t in our best interests – especially when the New Zealand Government is the majority shareholder of Air NZ.

Meanwhile, across the Tasman, Qantas is looking commanding. It has a huge suite of aircraft on order, with the wider group (including Jetstar) set to take delivery of “an average of one new plane every three weeks for the next three years.”

It’s about to compete with Air NZ on its new flagship Auckland to New York route, and in the past few years has launched long-haul services like Sydney to Rome and Sydney to Bengaluru (formerly known as Bangalore) alongside a new Melbourne to Delhi flight. It’s also about to open a glitzy new lounge in Auckland.

More important, Qantas has just scored a major coup. It’s hired former Air NZ executive Cam Wallace to head its international operations. Wallace knows where Air NZ’s weaknesses are; he was the airline’s Chief Commercial and Customer Officer until 2020. He’s regarded as one of the best in the game, and is now a top contender to replace Qantas CEO Alan Joyce when he eventually steps down.

It’s, of course, not all rosy across the Tasman. Qantas has had a difficult restart post-Covid with a multitude of issues, and pre-Covid Air NZ was named Australia’s favourite brand.

The fact remains, Air NZ made difficult decisions to stay afloat during an unprecedented crisis. It’s easy to critique with the comfort of hindsight. Lots of airlines sold planes, including Qantas.

But in terms of the longer-term outlook, Qantas is wanting to be a more dominant player on the international front. The crucial question is: will that come at the expense of Air NZ? And where does this leave travellers?

We should start to see the battle between the two play out more aggressively on the Tasman pretty soon. That’s because Air NZ has traditionally held the largest market share of any one airline crossing the Tasman, despite Australia having a much larger population. Qantas is being beaten in its backyard, where it should have the population base and loyalty to be dominant.

Wallace spent years helping build that market share at Air NZ; I’m certain he’ll have a plan for Qantas to try and make inroads.

This will all eventually be good for you and me: the travelling public. Because increased competition will help to bring down fares. And the battle royale between Air NZ and Qantas is only just starting to heat up.

- Brook Sabin is a travel reporter for Stuff and former political reporter.