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Air New Zealand: Restructuring the full service model to meet low cost competition


Air New Zealand, like most network carriers, has been seriously hit by the global financial crisis, which has had a major impact on the carrier’s yields and profitability. Further contributing to the pressures is the increased presence of LCCs in the carrier’s key domestic and trans-Tasman markets. Combined, these two factors have shifted the demand dynamics on these routes. [4563 words]

Unlock the following content in this report:


  • Air New Zealand “transforming” its short-haul Tasman/Pacific Island product
  • Business class to be eliminated on Air New Zealand’s A320 Pacific fleet
  • Tasman market challenged by “intense competition” and “unstable market dynamics”
  • Australia-New Zealand travel market a significant one
  • Air New Zealand remains largest carrier on the trans-Tasman
  • Trans-Tasman LCC capacity share reaches 28% 
  • Pacific Blue enhances New Zealand-Australia operations
  • LCC penetration on trans-Tasman services higher than average domestic and international capacity shares 
  • Air New Zealand doubles net profitability, but warns of tougher second half conditions
  • Cost reductions across the board
  • Global economic crisis impacts yields and demand levels; yields showing some signs of improvement in Feb-2010
  • Passenger demand bottoms out in 1HFY2010, with signs of demand recovery
  • No fleet deliveries in 2010; five in 2011
  • Unveils new ‘SkyCouch’ Economy Class seating concept to “transform international air travel”
  • Unsustainable competition intensifies in the domestic market?
  • New Zealand an “active pursuit” for Jetstar
  • Pacific Blue to target regional New Zealand services with E190 equipment?
  • Outlook:  2010 to be “one of the most defining in Air New Zealand’s history”

Graphs and data:

  • Weekly capacity between Sydney and Christchurch: Mar-2010
  • Aircraft usage on Australia-New Zealand services: Mar-2010
  • Weekly capacity between Sydney and Auckland: Mar-2010
  • Weekly capacity between Melbourne and Auckland: Mar-2010
  • Air New Zealand’s trans-Tasman and Pacific Island network map: Mar-2010
  • Australia to New Zealand capacity share: Feb-2009 to Mar-2010
  • Weekly capacity between Melbourne and Christchurch: Mar-2010
  • New Zealand international capacity (seats per month), LCCs as a percentage of the total: 2001 to 2009
  • New Zealand international capacity (seats) by carrier: Mar-2010
  • Air New Zealand operating profit and net profit margins (%): FY2005 to 1HFY2010
  • Key influences on Air New Zealand’s profitability for the six months ended Dec-2009
  • Air New Zealand employee numbers: Jun-2007 to Dec-2009 
  • Air New Zealand yield developments: Jul-2008 to Feb-2010
  • Air New Zealand systemwide capacity (ASK): Feb-2004 to Feb-2010
  • Air New Zealand total passenger numbers and PLF: FY2004 to 1HFY2010
  • Air New Zealand fleet delivery plans: FY2010 to FY2015
  • New Zealand fleet delivery plans for commercial passenger airlines: 2010 to 2015
  • Air New Zealand network map: Mar-2010
  • New Zealand domestic capacity (seats) by carrier: Mar-2010
  • Air New Zealand domestic destinations: Mar-2010 
  • New Zealand domestic capacity (seats per month), LCCs as a percentage of the total: 2001 to 2009
  • Pacific Blue destinations map of New Zealand: Mar-2010
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