Air New Zealand FY2016: record profits. Growing competition means it is time to move upmarket

For an airline that is not large, Air New Zealand has been remarkably successful, now, notably in FY2016. It has selectively established helpful partnerships and, elsewhere, largely remained under the radar. It has excelled at marketing, and at market positioning.

But its home country is no longer the secret - or as inaccessible as - it used to be. That is a growing challenge for Air New Zealand, which for years has quietly and effectively exploited the limited competition. Two new entrants to Auckland in the North American market, and more nonstop capacity from North America to Australia - a 6th freedom staple for Air NZ, will elevate the threats. In the peak summer Chinese airlines will have one third as much capacity into New Zealand as Air NZ has long haul capacity to the world. The New Zealand government has considered granting fifth freedom rights for unserved routes. Domestically, Jetstar is challenging Air NZ on select regional routes.