Brook Sabin is a travel reporter for Stuff, and formerly worked in the Parliamentary Press Gallery.
OPINION: We are witnessing a potential game-changer in aviation.
This week, a shiny Dreamliner with a big kangaroo on its tail will land at Auckland Airport. The plane is here on its first direct service between Auckland and New York, taking on Air New Zealand’s flagship route.
But, while much of the attention will go on that battle, there is something much bigger bubbling away.
Air NZ made a significant strategic decision during Covid: it wanted to build back a smaller international airline. And guess who’s gone in the opposite direction and is now throwing serious capacity our way: Qantas.
The wheels aren’t even off the ground for its New York flight – which starts in Sydney and stops off in Auckland where Kiwis can jump aboard – and Qantas has already upped the ante. It’s announced that it’ll fly the route four times a week from October, meaning Qantas will have more services than Air NZ’s three a week. The Kiwi carrier is being outpaced on its own flagship route.
Qantas is having a glitzy cocktail party in Auckland ahead of the launch. I have no doubt that Split Enz “I See Red” will be echoing around the room.
But there is something much wider happening that will only be obvious to the public over the next few years. Qantas has launched a renewed offensive, and it wants market share.
Air NZ took a gamble during Covid. It anticipated demand would be much slower to rebound and permanently grounded more than 25% of its long-haul fleet. It also pushed out future wide-body deliveries.
However, the relaxation of Covid rules has seen a huge spike in demand. Air NZ has found itself short on planes, and is even leasing one from Spain to run its Perth services and is in the final stages of leasing an extra 777-300ER.
Before Covid-19, the airline had 29 long-haul aircraft. The latest set of Investor documents reveals the airline doesn’t expect to return to that number this decade. Yes, it’s ordered eight new 787s, but that’s all part of its fleet simplification strategy, that will see the 777-300ER retired. The documents show by 2028 it expects to have just 22 wide-body jets – fewer than before Covid – even five years from now.
On the other hand, Qantas has announced an enormous order of new aircraft. One new plane will arrive every three weeks over the next three years. Granted, most of them are domestic or short-haul planes, but it’s an aggressive move from Qantas.
And the big trans-Tasman push is already playing out.
I live in Christchurch, and recently needed to travel across to Sydney. I am very loyal to Air NZ, but it’s only operating one flight a day – or seven a week. However, Qantas currently operates 11 flights a week. On top of this, it has a daily codeshare with Emirates on the giant A380. That means Qantas can sell tickets on 18 services between Christchurch and Sydney a week; whereas Air NZ has just seven.
Compare this to before Covid, and Air NZ offered more services than Qantas.
In Wellington, Qantas has 14 flights a week to Sydney, compared to Air NZ’s seven.
It’s equally fascinating in Auckland. For the week beginning the 19th of June, Qantas is offering 36 flights to Sydney whereas Air NZ is offering 30. Before Covid-19, Air NZ had equal or greater frequency.
In Air NZ’s defence, it does run bigger planes on some routes and has more direct options to places like Adelaide and Perth. However, the lucrative business market is all about frequency – and the race between the two appears much closer than pre-Covid. In some cases, Qantas now has the upper hand.
Air NZ has also built itself up to be the dominant carrier in the Pacific over decades. But even Qantas is starting to make inroads there, now flying routes to Samoa and Tonga.
What’s happening in the Cook Islands is even more substantial. Air NZ used to fly Sydney to Rarotonga, which has been replaced by soon-to-launch Jetstar flights. If you combine that with Jetstar’s Auckland to Rarotonga services, the Aussie airline (which is owned by Qantas) is putting pressure on Air NZ, which has done the opposite and reduced its pre-pandemic schedule.
Why is this all happening? In part, it’s a lack of planes. Without its full pre-Covid suite of larger aircraft, Air NZ is deploying smaller planes on more routes. This is stretching capacity, leading to a reduction in services in some places.
On the important Auckland to Los Angeles route, Air NZ flew at least twice a day before Covid-19. Now it flies once, and it’s about to face competition from Delta, an excellent airline that has committed to flying year-round.
While Air NZ has launched just one new international route in recent years – New York – Qantas has announced expansion to places like Italy and India and is planning direct flights from Sydney to London.
Another sign Qantas is intent on making inroads here is the appointment of Cam Wallace as head of its international operations. Wallace knows where Air NZ’s weaknesses are; he was Air NZ’s Chief Commercial and Customer Officer until 2020.
Air NZ would argue it’s refocusing its efforts on where it’s dominant – domestic and short-haul – and is expected to post a great profit. It’s also relying more on alliance partners such as Singapore Airlines and United Airlines to add capacity. Yes, I agree. And Air NZ has amazing loyalty and a very good sales machine. It can fill planes.
But, we’re an isolated island nation where almost everyone comes by air. Our prosperity relies on long-haul jets. And a smaller home-based international airline has a huge flow-on effect for our economy longer term. Is it really in our nation’s best interests to be handing more long-haul flying to foreign airlines? Remember, Air NZ’s biggest shareholder is the New Zealand Government.
It’s not all rosy across the Tasman, of course. Qantas has had a difficult restart post-Covid with a multitude of issues, and pre-Covid Air NZ was named Australia’s favourite brand.
On top of all this, the fact remains that 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 airlines are at war with each other – particularly rivals like Air NZ and Qantas. And our national carrier has re-entered the fight in a weaker position with its international arm. And Qantas knows it.
By Brook Sabin
Source Stuff.co.nz
