New equipment, capacity aimed at Air New Zealand growth

By Graeme Kennedy

Friday 8th November 2002

Air New Zealand's domestic new look launched a week ago with its low-cost Express product is only the start of a wide-ranging overhaul of the carrier's services aimed at sustained growth and profitability.

New equipment and more capacity on routes that warrant it will be introduced to regional and long-haul international networks in a bid to increase revenues and meet customer demand in the airline's transtasman, Pacific Islands, US, Europe and Asian markets.

Air New Zealand reported a first-quarter profit before tax and unusuals of $30.4 million compared with a $51.8 million loss in the 2001 period after cutting domestic and international capacity to match falling demand.

The result was increased load factors across the network and with further capacity management the carrier expects a full-year result of around $200 million.

Domestically, Air New Zealand is adding a 10th Boeing 737, which becomes available from the regional fleet as subsidiary Freedom Air focuses on Queensland services while a 10th ATR will be delivered to Mount Cook Airline in February to increase tourist services between Christchurch, Rotorua, Queenstown and Dunedin.

Freedom will boost New Zealand-Queensland seats by 23%, which includes 64% more capacity between Brisbane and Christchurch.

Auckland-Sydney flights will go to four flights a day while more services will operate between Auckland and Nadi and Rarotonga.

Air New Zealand has ordered 15 Airbus A320 twinjets for short-haul international services and taken options on another 20. Configured with eight business class and 138 economy seats, the aircraft will be delivered from October next year until late 2006.

In the long-haul markets, Air New Zealand will fly from Auckland twice daily to Los Angeles, its direct Sydney-Los Angeles services will go from three to five a week and Auckland-Nadi-Los Angeles and Auckland-Rarotonga-Papeete-Los Angeles flights will be increased from two to three a week.

The carrier has recently expanded its code-sharing with Lufthansa to gain more traffic from Europe through Los Angeles.

In Japan, Air New Zealand has gone daily to Kansai and Tokyo and is lifting capacity on its daily Nagoya service by replacing Boeing 767s with 747s. The airline is also returning to the Japan-New Zealand group tourist charter business.

Hong Kong services will go from three a week to five while Auckland-Singapore is daily.

CEO Ralph Norris said the changes, beginning with the domestic operation, strengthened the airline's business "from the core out, starting with the points where increasing competition can do most damage to the company's financial performance."

Air New Zealand also plans to upgrade its long-haul product.

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