New Zealand lifts aviation capacity for Chinese carriers

AUCKLAND NEW ZEALAND December 10, 2015. Air China Airbus A330-200 B-5932 arrived at Auckland International Airport today to begin the new direct service from Beijing to Auckland. (Mike Millett)
A file image of an Air China Airbus A330-200 at Auckland after the airline’s inaugural flight from Beijing. (Mike Millett)

Chinese airlines will be able to operate 59 passenger flights a week to and from New Zealand under an expanded bilateral air services agreement.

New Zealand Transport Minister Simon Bridges said the new limit was an increase from 49 flights a week currently and could rise further in the coming years should there be demand for more flights, as the government seeks an eventual open skies agreement with China.

Bridges said on Monday there were 421,000 visitors from China to New Zealand in calendar 2016, up 12 per cent from the prior year.

“China is our second largest source of visitors after Australia, so it’s important that we have the appropriate agreements in place to support this,” Bridges said in a statement.

“The amendment will also allow additional airlines to enter the market, ensuring a competitive environment that will benefit New Zealand and Chinese travellers.

“Officials also have the opportunity to further expand the agreement later this year if certain conditions are met.”

Under the new arrangements, Bridges said Chinese airlines were also able to operate “between airports in New Zealand during the course of their international service, allowing airports that do not receive flights by Chinese airlines the opportunity to do so”.

There were currently five Chinese flag carriers offering nonstop service between China and New Zealand – Air China, China Eastern, China Southern, Hainan Airlines and Tianjin Airlines. Meanwhile, Sichuan Airlines was due to commence nonstop flights between Chengdu and Auckland in mid-June.

On the New Zealand side, Air New Zealand flies nonstop to Shanghai – its only destination in mainland China – from its Auckland hub with Boeing 787-9s while it codeshares on joint-venture partner Air China’s Beijing-Auckland service.

The arrival of Chinese carriers in the New Zealand market, amid a big jump in international capacity more generally, was cited as one of the factors behind Air New Zealand’s decline in profit during the first half of 2016/17.

Air New Zealand chief executive Christopher Luxon noted at the company’s first half financial results in February eight new carriers had entered the New Zealand market in recent times, which impacted his airline’s revenue per available seat kilometre (RASK) metric.

Further, the Star Alliance member posted a 3.1 per cent fall in passenger revenues in the 2016/17 first half.

“Turning to Asia we certainly experienced weaker performance than we had hoped in the period,” Luxon told the financial community at the first half results presentation.

“Overall, the new capacity introduced by carriers in China and Hong Kong was just too much for the market to absorb and we saw this manifest itself in RASK declines in the first half.”

Bridges confirmed New Zealand was looking for an eventual open skies agreement.

“New Zealand is committed to liberalising air services, allowing for competitive markets, increased air traffic, lower air fares and stronger international trade links,” Bridges said.

“We have progressively enhanced this agreement. In 2014 the agreement provided 42 offerings per week and was increased in 2016 to 49. We will continue to work towards an open skies agreement with China.”

Australia and China established an open skies policy in December 2016, allowing unlimited passenger capacity for flag carriers of both countries.

The agreement has paved the way for China-based carriers to maintain the furious pace of growth into this country in recent times, catering for the increasing number of Chinese tourists travelling overseas.

On the Australian side, Qantas flies to Beijing and Shanghai from Sydney, while Virgin Australia plans to begin nonstop service to mainland China as part of a proposed alliance with HNA Group affiliated airlines.

Comments

  1. Oskar Clare says

    BNE really needs A Beijing service. Hoepfully Kate Jones can get one for BNE as well as China Cairns flights

  2. David says

    Air New Zealand has noted that one of the reasons for a decline in the profit margin was the increase in Chinese capacity. You would think the NZ Government would be baring this in mind, and also pushing for Air New Zealand to be pursuing more destinations in China.

    Both the Australian and New Zealand Governments appear to be bowing down to Chinese carriers, as a means to help the tourist economy in both countries.

    Does anyone have actual figures to prove whether this is the correct policy to proceed with?

  3. John says

    It’s not all about Air NZ’s own profitability, David. It’s about opening New Zealand up to more tourists to allow tourism, accommodation and hospitatility companies to make a living. You are clearly an AirNZ employee that is bitter about your reduced loading.