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Good and Bad News From Air New Zealand

In a move that’s disappointed London based New Zealanders, Air New Zealand has dropped its long-held fifth freedom flight between Los Angeles and London. After nearly 40 years of shuttling New Zealanders from Auckland to London via the United States, the airline has decided to dip out of this competitive routing.

The airline first flew to London in 1982 – first utilizing Gatwick airport – and later moved to Heathrow as lucrative slots became available in 1994. Air New Zealand acting CEO Jeff McDowall stated that there are now twice are many ways to get to London than just a decade ago. With fewer people choosing to fly via Los Angeles as the Middle East becomes a hub of preference, Air New Zealand has decided to focus its energies elsewhere.

This is the first major announcement from the acting CEO, who is holding the fort until Walmart’s Greg Foran assumes the Chief Executive position early next year.

It wasn’t so long ago that Air New Zealand was proudly touting it’s around the world service flying from Auckland to London via Los Angeles and returning via Hong Kong. This service ran between 2006 and 2013 when the Hong Kong to London Heathrow portion was scrapped. The then CEO of Air New Zealand, Rob Fyfe, stated the route was unlikely to become profitable at any point in the near future.

The cessation of this service will see the exit of the koru from the European continent altogether – the airline having pulled out of Frankfurt, its previous only other European destination, in 2001. The Los Angeles to London Heathrow route will cease to operate in October 2020.

In happier news for New Zealanders and those wanting to visit them, Air New Zealand intends to launch a direct Auckland to New York flight. This follows the introduction of flights to San Francisco (2004), Houston (2015) and Chicago (2018), with the airline clearly focusing on point to point North American operations.

The new route, launching in October 2020, will be amongst the airlines longest – clocking in at a lengthy 15h 40m heading east, and 17h 40m going west. The flights will also, symbolically, utilize the airlines NZ1 and NZ2 flight numbers, which will be made available with the cessation of Los Angeles to London Heathrow flights.

The service will access Newark airport and will operate three times per week using the carrier’s Boeing 787-9 Dreamliner aircraft, subject to appropriate regulatory approvals. This will mean a reduction in travel time of around three hours for New Zealanders wishing to visit the East Coast and New York.

Air New Zealand has confirmed that it believes that the North American market represents future growth opportunities for the airline, with Mr. McDowall stating that the new flight and network change “puts us in the best position to take advantage of this while opening up the Big Apple for our customers”.

It’s not the only airline that is seeing opportunities in connecting New Zealand to the world. American Airlines has recently announced that it will launch seasonal flights between Dallas and Auckland, and between Christchurch and Los Angeles, starting next year. Total American visitors to New Zealand have risen nearly 9 percent year to date to August 2019.

The announcement has been met with dismay from London-based New Zealanders, who seem to have helpfully forgotten how dismal it is to pass through North American customs just to transit through Los Angeles to another destination. While New Zealanders are fairly loyal to their national carrier, the increased competition on the long-held route means fewer Kiwis are flying Air New Zealand to London in the face of cheaper alternative options.

Air New Zealand staff in the United Kingdom, who number around 155 people (mainly cabin crew), are also understandably disappointed. These staff will be redeployed to other roles or made redundant as appropriate. The cool £10M to £20M likely to result from the sale of the Heathrow slots held by Air New Zealand will be a helpful (albeit, short term) increase to the airline’s bottom line.

The complete exit of the direct European market for Air New Zealand illustrates the increased importance of the airline’s alliance network. As well as being a member of the Star Alliance, Air New Zealand has strategic arrangements on specific routes with Singapore Airlines, Air China, Cathay Pacific, and United Airlines, allowing its customers to link to a number of worldwide destinations. It also has a number of ‘co-operation partners’, including a number of code-share flights on Aerolineas Argentinas, Etihad Airlines and Virgin Atlantic.

While most of these strategic partners are focused around the Asia-Pacific rim, the traditional Star Alliance network – including the likes of Lufthansa, Austrian and Swiss – provides a strong network of European connections for the airline.

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