Even as Air New Zealand and Qantas talk merger, the two carriers
are racing to add flights between the U.S. and New Zealand in the
wake of United Airlines’ decision to end its Auckland service.
United is ending its New Zealand service after 17 years on March
27, leaving Air New Zealand and Qantas as the only major carriers
offering direct service between the U.S. and Auckland. United
offers daily flights to Auckland, representing about 30 percent of
the available direct flights.
Bankrupt United’s departure “is unfortunate for the
marketplace,” said Gary Murphy, president of Brendan Tours.
New Zealand is reaping a bonanza of publicity, thanks to the
“Lord of the Rings” and the America’s Cup races. Lonely Planet
recently listed New Zealand as one of its top 10 hot destinations
for 2003.
In 2002, New Zealand attracted more than 200,000 visitors from
the U.S., compared to 140,000 in 1997, according to Tourism New
Zealand data.
To help handle the traffic, Air New Zealand is increasing the
number of its U.S. flights from 14 to 17 a week on April 30, after
moving from 10 to 14 flights a week last November. Qantas is
expected to add two more flights to its existing schedule of seven
flights a week, although a company spokesman couldn’t confirm
details.
In effect Qantas will raise its leisure travel capacity next
month when it eliminates first class seats on its U.S. flights.
Factoring in the additional flights, the number of seats
available from the U.. to New Zealand will actually increase in
2003, despite United’s departure, according to an Air Zealand
spokeswoman. More than 10,000 seats will be available for leisure
travel from April to October in 2003, an 18 percent increase from
the same period in 2002.
Complicating matters, last November Qantas agreed to pay about
$225 million for 22.5 percent of Air New Zealand. The pending
merger, which still faces several hurdles before approval, has
prompted howls of protests from critics in New Zealand who believe
the deal will threaten the sovereignty of the national airline and
lead to higher air fares by eliminating competition.
But Air New Zealand officials insist the merger won’t affect
fares.
“Other destinations are as much as a competitor to us, if not
more, than other competitor carriers,” said Peter Walsh, vice
president of the Americas for Air New Zealand. “We will need to
ensure that our pricing is not only profitable for Air New Zealand,
but also remains at a level acceptable to the consumer.”
Supporters see it as badly needed life support for Air New
Zealand, which received a $495 million infusion of cash from the
government a year ago. “From our point of view, [Air New Zealand
and Qantas] will strengthen each other and we’d like both to
survive,” said Ann Hartl, special projects manager for ATS
Tours.
ATS doesn’t use United, so it won’t be impacted by the company’s
departure from the market, “other than United clients will be
trying to use our seats,” Hartl said.
“Seats do get tight,” especially during high season, she added.
Tourism New Zealand is focusing a large part of its promotional
efforts on encouraging travel to New Zealand in off months,
according to Gregg Anderson, regional director of North America for
the government tourism agency.
“There’s never been a summer that we don’t have a bottleneck”
for airline seats, Anderson said. “Our challenge is to educate
travel agents and consumers that New Zealand is a wonderful place
to visit in March.”
United, which will continue to offer flights to New Zealand
through its code-sharing deal with Air New Zealand, provided tour
operators with easy access to New Zealand from the Midwest and
East.
“In past, United would have very competitive rates out of the
secondary cities,” said Murphy of Brendan Tours. “Hopefully the
agreements they come to with Air New Zealand will still have
competitive air fares out there for people from non-Air New Zealand
gateways.”
Beyond spotlighting the company’s financial woes, United’s
decision to end New Zealand service reflects the longstanding
inability of U.S. carriers to make the U.S.-Auckland route
profitable.
In 1990, American Airlines introduced regular flights to
Auckland via Honolulu. But American discontinued the route a year
later, and now is satisfied to code-share with Qantas, according to
an American spokesman, Al Becker.
