Air New Zealand plans for new long haul services in North America and South America

Air New Zealand joins Qantas Airways in evaluating both the 777X and A350 for its future widebody needs. Air NZ is an all-Boeing operator for its long haul fleet, but Airbus has been eager to promote the A350. Air NZ’s 777-200ERs are approaching mid-life, and Air NZ wants new aircraft to take advantage of the latest efficiencies and, in particular, range capabilities as it seeks new markets in the Americas.

Air New Zealand wants to fly further in North America and South America than Houston and Buenos Aires. North America is Air NZ’s largest long haul market, and is bigger than Asia.

For North America, a nonstop flight to New York is the obvious candidate and one the New Zealand government has wanted – even looking for fifth freedom operators to fly Auckland-New York (Qantas will consider this for the next decade). The US market is helped by Air NZ’s United partnership.

Other South American points will be further, and mean that Air NZ needs to find a new partner. The airline’s situation is unlike that of Qantas, and a nonstop flight to London is not on the cards.

Air New Zealand has simplified its fleet

Air New Zealand has long been a Boeing widebody operator. The 777X will ensure some commonality with Air NZ’s existing 777/787 fleet, which will likely be in service for much of the next decade. Airbus, however, has been eager for Air NZ to operate the A350 family.

The A350 family is closer in size to Air NZ’s existing 777/787 fleet while Boeing‘s 777X family is slightly larger and would result in a slight upgauge for Air NZ – although this could allow the airline to grow capacity incrementally (and not substantially) without changes in frequency.

Air NZ has been simplifying its fleet and reducing costs from it. The added costs of additional types could be acceptable – depending on how good the acquisition costs are.

Air New Zealand to fly further than Houston and Buenos Aires

Air NZ has outlined its near term growth priorities: launching three weekly AucklandTokyo Haneda flights while maintaining existing daily Tokyo Narita service, and expanding Buenos Aires (increasing frequency from 3x weekly in winter and 4x weekly in summer) and Houston (targeting daily service).

Air New Zealand’s focus is the Pacific Rim. Air NZ has flagged that with new and longer-range aircraft it wants to fly further in North and South America.

Houston and Buenos Aires are relatively new services in Air New Zealand’s long history. The two are also Air NZ’s longest routes. North America is Air New Zealand’s largest market by ASKs. Air NZ has a larger presence in North America than in all of Asia. Meanwhile, South America is its smallest international market.

Air NZ was eager to have a service to Latin America. The preferred market was São Paulo but the route was too long to be viable. São Paulo is 12,045km from Auckland, compared to Buenos Aires at 10,334km from Auckland.

During its planning for Latin America Air NZ was limited by partnerships, since Star’s member TAM was leaving for oneworld. Santiago is also closer to Auckland than points in Brazil, but oneworld’s LAN (now LATAM) dominates Chile.

Air NZ was instead able to partner with Aerolineas Argentinas. Although Aerolineas is in SkyTeam, there is no other Star partner and Aerolineas had exited the Oceania market, so it was convenient for the Argentine flag carrier. Star is making some developments in Brazil with Avianca Brasil being a full Star member, but Star also hopes to attract a second Brazilian airline – likely Azul, with which United has an FFP partnership – as either a member or connecting partner.

Buenos Aires was a leap for Air NZ – a new continent, working with an uncertain partner – but one that the airline is pleased with. New generation aircraft may give the range to reach a further flung point in Latin America but Air NZ will need to find another partner, and could end up making another bold move on Latin America.

Air NZ shortlisted Houston, along with Las Vegas and Chicago, for North American growth. This was a public declaration. Internally, Chicago was too far, while Las Vegas was not much further beyond Air NZ’s existing points of Los Angeles and San Francisco. Las Vegas is largely a leisure market and can be accessed via codeshare from California. Houston, a major hub for Air NZ’s partner United, opened up a new catchment area to Air NZ and gave it stronger connections to the southern and eastern parts of the US. This used a similar logic to Qantas‘ decision to serve Dallas.