Air New Zealand is facing intense competition in the transpacific market, with major U.S. airlines expanding their networks to include flights to New Zealand. The aggressive expansion of U.S. carriers has led to a significant increase in the number of flights between the U.S. and New Zealand, putting pressure on Air New Zealand’s market position. The increase in competition has also led to lower airfares, benefiting passengers but impacting the profitability of airlines operating in the region.
The U.S. carriers, including American, Delta, and United, now offer daily departures from their West Coast hubs to Auckland, as well as other destinations in New Zealand. This increased competition has made it challenging for Air New Zealand to maintain its historically strong market position. In addition to competition from U.S. carriers, Air New Zealand is also facing challenges in its domestic operations, with soft demand for corporate and government travel leading the company to reduce capacity in response to changing demand profiles.
Despite the challenges in the transpacific market and domestic operations, Air New Zealand is seeing growth in its Asia routes, with outbound demand from India standing out as a positive factor. Capacity to other Asian destinations such as Singapore, Taipei, and Tokyo is expected to increase in the coming months, along with the return of seasonal services to cities like Seoul. However, the airline noted challenges in the Chinese market, with visa processing delays affecting capacity growth.
Overall, Air New Zealand’s total network capacity for the 2024 financial year is expected to reach 93% of pre-pandemic levels, despite the headwinds faced in the transpacific and domestic markets. The airline has seen an increase in membership in its Airpoints loyalty program and a rise in its workforce, driven by strong demand. Despite lowering its earnings guidance for the current financial year, Air New Zealand remains optimistic about its long-term prospects and is taking steps such as a domestic fare review to improve operational resilience and profitability in the face of intense competition.
