Air New Zealand to review long haul

written by australianaviation.com.au | August 26, 2011
An Air New Zealand 777-300ER.

Air New Zealand has announced it is to review its long haul route network, which it says is losing NZ$1m (A$800,000) a week.

“International markets remain volatile and this has an impact on the demand for New Zealand as a destination,” Air NZ CEO Rob Fyfe said yesterday in announcing the airline’s profit results. “This has seen long haul routes in our network lose more than $1m a week in the first six months of this calendar year. No stone will be left unturned as we rigorously review our business model, the routes where our capacity should be deployed, our sales and marketing strategy and alliance partner opportunities. The process of change will start to take place this side of Christmas.”

Fyfe said high fuel price, the rising New Zealand dollar, a weakness in demand from key tourism markets the US and UK meant the airline’s long haul network is struggling.

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Only last week Qantas announced changes to its long haul network following a similar review. Qantas’s changes include 1000 job cuts, retiring 747-400s and deferring A380s, and cutting some services to London.

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9 Comments

  • Chris

    says:

    I bet we won’t see the same sort of media circus here as we have with Qantas.

    Interesting that Air NZ with their 777’s are also losing money……..

  • Ron

    says:

    The 777 is undoubtedly a better plane, but NZ is a smaller country, & “as a destination”, probably ranks below Australia for incoming traffic, & has fewer people leaving to go overseas too. And probably the majority of outbound traffic is only to Australia, & you don’t need a 777 for that! Their announcements are not surprising.

  • Jake deVal

    says:

    I have been watching this madness of discounting since it was introduced. It is nice to have free-enterprise and a competitive market BUT: Established airlines cannot compete with operators who compromise safety and or will are going to go broke while competing – one doesn’t have be a MENSA member to figure that out that if one can survive competition with one or two competitors going broke – they cannot out-last a never ending stream of “go-brokers”. There HAS to be a bottom line and I think the airline industry is dangerously well below that median!

    The industry HAS to be profitable.

  • Random

    says:

    It seems that the only routes that QF and ANZ really want to ply their trade are US and UK. Why is the profitability of the local international industry so close to permanent crisis and why are virtually the only high yield routes those to the US and UK. Occasionally we hear of a new route to another non US or UK location but generally all expansion is now wedded to LCC operations. Surely there are more high yield routes than London and LA.

  • Michael Angelico

    says:

    I flew Air NZ a couple of years back and they have a damn good product. I’m fairly sure it was the best international flight I’ve ever taken, even better than Emirates. It’d be a shame to see that cut back.

  • hugo brown

    says:

    Air NZ about time I have to say, it straddles btw a full service airline and LCC , its rediculous and the airfares are so high why would you bother.

    They also as Random said above they need to look beyond LONDON or LA / USA I mean why not fly to UAE – Dubai or Abu Dhabi or try out new routes in South East Asia, I mean these are the places many in NZ & Australia are flying to now, people will pay if the service is good or mainland europe like Germany / France why must everyone on Qantas or Air NZ be shovelled off in Hong Kong or Bangkok to catch connecting flights.

    Nway I hope they seriously look more into there product & fares and hopefully annouce new routes.

  • Robert T

    says:

    I note that Air NZ are putting on additional services between Perth & Auckland this (southern) summer, a route I fly fairly often. I hope that they can deploy some 777’s to this route, some time soon, as with the five ageing 767’s the customers are due for an improvement.

  • Flag Carrier

    says:

    Now that Mr Fyfe has a lap dog prime minister in John Key he is free to execute the plans laid down by his predecessor Mr Norris – to sell the airline off to the lowest bidder.

    Too bad for the poor old Kiwi taxpayer who poured 1Billion in to save it.

    Same old story – talk down the assets prospects, cut it up and flog it off. When he announces mass lay-offs the National government will say ‘oh well you have to do what you have to do’.

    Norris is known to have said he wished it had gone bust on paper (when it nearly folded along with AN) so he could have torn up all the contracts (EBA’s)

    Weird how they are buying all this new 773 gear (same as VA….)… Fyfe used to work for VS….have done some initial code sharing with DJ and are about to reorganize their operations while VA and DJ are relaunching themselves and altering their routes.

    I am seeing a Red future for Air NZ !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Flag Carrier

    says:

    Regarding my previous post –

    I may be incorrect re Fyfe having worked for VS (he did lead ITV Digital at the time it went Bankrupt ) it may have been the former GGM of Air NZ Inernational Airline Ed Sims that worked for VS or another member of the NZ exec team but I am unable to verify exactly who.

    Still the money is on yet another merger/takeover/asset grab in the NZ Aviation market.

    Either way it will mean lower wages for Air NZ staff, higher airfares for the average Joe and yet another dose of spin about the benefits of code sharing and cutting routes.

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