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Qantas follows Air NZ with Auckland-New York route – but there should be room for both

Analysis

Qantas has revealed its plans to resume its high-profile one-stop route to New York route in 2023, with a significant new twist – switching its stopover point from Los Angeles to Auckland.

This is no doubt unwelcome news for Air New Zealand, which is about to launch its own route between Auckland and New York John F Kennedy International Airport (JFK).

While it is tempting to view this as Qantas taking a shot across Air New Zealand’s bows, there are much more compelling reasons why changing to an Auckland stopover makes more sense for Qantas on its New York service.

Summary:

  • Qantas will launch Auckland-JFK leg nine months after Air New Zealand.
  • Changing the Qantas stopover to Auckland improves connecting opportunities for the airline.
  • Qantas intends to continue the SYD-AKL-JFK route after the 'Project Sunrise' launch.
  • Air New Zealand will also tap into Australian market with its JFK flights.

Auckland offers more network advantages as a New York stopover point

Qantas announced on 25-Aug-2022 that it intends to launch the Sydney-Auckland-New York Kennedy International Airport (JFK) route on 14-June-2023.

The service will initially operate three days per week, using Boeing 787-9s. Flight time is expected to be 16 hours northbound and 17.5 hours southbound.

The airline previously used Los Angeles as the stopover for its JFK flights but it suspended the service due to the COVID-19 pandemic. There are “significant advantages” to switching to Auckland as the stopover, said Qantas CEO Alan Joyce during a media briefing.

A major factor is that Auckland offers more connecting opportunities for Qantas than Los Angeles.

The route will be Sydney-Auckland-JFK, but passengers can also connect to the JFK flight from other Australian cities via Auckland. Qantas currently has a total of six daily flights to Auckland from three Australian cities, and it will have 11 per day by the time the JFK flights resume in 2023. 

Mr. Joyce notes that Qantas was not allowed to sell seats for the Los Angeles-New York domestic leg, but the airline has the traffic rights to offer Auckland-New York flights.

Many US tourists want to visit Australia and New Zealand on the same trip, and the new routing will allow Qantas to cater to this demand more easily.

The airline intends to upgrade its Auckland lounge and will expand its capacity by 40%. This move will account for the increased number of Qantas passengers connecting in Auckland after the JFK flight starts, Mr. Joyce said.

The one-stop JFK route is not just a placeholder until Project Sunrise begins

Qantas has a longer term plan to launch nonstop flights from Sydney to New York under its Project Sunrise initiative. The airline has ordered Airbus A350-1000s for this purpose and intends to launch the flights in 2025.

Mr. Joyce said Qantas was aiming to retain the one-stop flights via Auckland even after the nonstop New York route is launched.

“We think they could complement each other and potentially serve slightly different markets”, Mr. Joyce said. 

Similarly, Qantas intends to keep operating its Sydney-Singapore-London flight after it begins nonstop Project Sunrise flights between Sydney and London.

Air New Zealand’s JFK launch gives it better access to an important market

Qantas will be following Air New Zealand on the Auckland-JFK leg.

The New Zealand airline is due to launch its own three-days-per-week flights to New York on 17-Sep-2022, also using 787-9s.

Air New Zealand lists the same flight times as Qantas for the 14,200km route – 16 hours/17.5 hours. This makes it Air New Zealand’s longest ever scheduled route.

When this route was confirmed in Mar-2022 Air New Zealand said it would have some payload restrictions, varying depending on weather conditions: payload restrictions would be more prevalent on the southbound leg.

Unlike Qantas, Air New Zealand will operate to New York as a new destination. The airline has been talking about this route for years, but its plans were delayed by the pandemic.

Air New Zealand wants to tap into the lucrative New York market, as a nonstop route will be more appealing than flying via the airline’s other US gateways.

As with Air New Zealand’s other Americas routes, the airline will be looking to draw traffic from Australia to its New York service. It connects its extensive trans-Tasman network to the trans Pacific flights via the Auckland hub – Australian connecting traffic has factored heavily in the airline’s business case models for new US routes in recent years.

Leveraging Australian and New Zealand markets broadens network options in both directions

By using Auckland as a connecting point, both Qantas and Air New Zealand will be able to draw on the Australian and New Zealand markets to fill their outbound flights. In the other direction, their JFK-Auckland flights will be able to tap into US visitors wanting to travel to either Australia or New Zealand – or both.

Obviously having Qantas start the same route is something Air New Zealand would want to avoid, however, there should be enough demand to allow the services to coexist.

Another point is that the new nonstop JFK routes will siphon off some of the traffic that is currently connecting via the two airlines’ other US gateways. So that may factor into capacity plans for the other US-Australasia routes.

Air New Zealand will have a nine-month head start on Qantas with its JFK route, and this will allow it to become established before its competitor arrives.

In all likelihood, Air New Zealand’s success in drawing Australian traffic to its US routes would have helped convince Qantas that it could also make an Auckland stopover work.

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