Air New Zealand and Cathay Pacific extend strategic agreement for a further five year period

Air New Zealand and Cathay Pacific will extend their joint venture alliance, which dates back to 2013, for a further five years to 31-Oct-2024 after authorities in both New Zealand and Hong Kong gave the green light to continue the arrangement. The partnership is key for both carriers’ network strategy in the Pacific Rim.

Since first forming an alliance in 2013, the two carriers have together increased frequency and capacity between New Zealand and Hong Kong and now provide travellers with up to four services a day.

“Hong Kong is an important gateway for travel within North Asia, including into Southern China and beyond. We have a strong partnership with Cathay Pacific and together we can stimulate tourism and trade, as well as providing customers with better connectivity and choice,” explains Nick Judd, chief strategy, networks and alliances officer, Air New Zealand.

During peak months, the alliance partners jointly operate a total of 25 return services per week, comprising three daily flights between Auckland and Hong Kong and four weekly departures between Christchurch and Hong Kong, a seasonal route that grows from three weekly flights when it resumes in late Nov-2019.

CHART – Air New Zealand and Cathay Pacific are the only non-stop operators in the New Zealand – Hong Kong after Hong Kong Airlines exited the market in May-2019Source: CAPA – Centre for Aviation and OAG

Cathay Pacific’s director commercial Lavinia Lau describes New Zealand as an important part of its network and a popular destination for customers. “Our joint venture alliance with Air New Zealand has allowed us to offer more flights and more seats between Hong Kong and New Zealand, while also enabling us to introduce new routes such as our non-stop seasonal service to Christchurch which will step up from three to four flights per week this year,” she says.

“With this partnership extended for a further five years, we can continue to offer more choice and convenience to our customers when they fly with us,” she adds.

You could argue that the partnership between Air New Zealand and Cathay Pacific is not in the best interests of the market and has ultimately forced the only competitor, Hong Kong Airlines to end its own flights between Hong Kong and Auckland in May-2019. However, the New Zealand market is small and complex and thus can be confronted with some difficult decisions.

Governments never want to be responsible for losing an air service. New Zealand has faced this prospect twice with this airline relationship with Cathay Pacific and Air New Zealand both arguing that without the JV one of them would have to exit the market. The balance is certainly more delicate for the New Zealand government. The extension of the partnership highlights a continuation of its stance on this matter.