Air New Zealand Eyes Growth As Fleet Pressure Starts To Ease

Air New Zealand is preparing to resume short-haul network growth as it boosts its operational narrowbody fleet, and the carrier is also looking further ahead to new long-haul opportunities.

The airline has been severely affected by engine shortages in both its Airbus narrowbody and Boeing 787 fleets over the past several months, which has caused it to make network cuts. However, some relief is in sight thanks to new deliveries and grounded aircraft returning to service, says Mike Williams, Air New Zealand’s chief transformation and alliances officer.

While many airlines have been affected by engine availability issues, Air New Zealand’s relatively small fleet means the disruption has been proportionally greater. The airline currently has four 787s and five A320neo-family aircraft grounded, a significant percentage of its jet fleet of more than 50 aircraft.

The airline wants to move beyond talking about the frustrations of capacity shortages, Williams told Aviation Week on the sidelines of the International Air Transport Association annual meeting in Delhi on June 2. “We’ve ridden [through] the bottom of that curve, but the good news is that ... more capacity is coming online,” he said.

A new A321neo was delivered to Air New Zealand on June 4, and another A321neo is due in late June with an ATR 72 turboprop expected to arrive in July. The carrier has also managed to source additional engines to return some of its grounded A321neo capacity to service, Williams said.

Both of the new delivery A321neos are configured for short-haul international service rather than domestic. This will allow Air New Zealand to put more capacity onto Australian and Pacific Island routes, where the demand outlook is strong, Williams said.

In one such move, the carrier recently announced the launch of a new seasonal route between Christchurch, New Zealand, and Adelaide, Australia, which is set to begin in October. The airline has also revealed plans to add more services in its domestic network.

Air New Zealand’s next additions to its long-haul fleet will be two 787-9s, due for delivery in March and April, Williams said. These will be its first powered by GE engines rather than Rolls-Royce.

The two 787s will be deployed on Air New Zealand’s existing Auckland-New York route. They will have a higher proportion of premium seats and will feature the carrier’s new Skynest product.

Skynest comprises six bunk-like beds that can be booked by economy-class passengers for four-hour periods. The carrier is yet to announce pricing details for the product, but it is likely to be NZ$400-600 ($241-363) per sleep period, Williams said. Passengers must also have a seat booked.

Air New Zealand is in the process of gaining the required certifications and approvals for the Skynest concept. However, Williams said the carrier is confident it has a “clear path to certification.” The product will be installed in the two 787s in Singapore.

The carrier has dry-leased three 777-300ERs to help offset the grounding of some of its 787s. It also plans to wet-lease a 777 from Spain’s Wamos Air over the summer peak season, Williams said. The airline now operates 10 777s including the dry-leased planes.

Air New Zealand is working on plans for long-range routes it aims to start when its 787 fleet availability is back to normal levels. The airline wants to launch service to India and to return to London after exiting that market in early 2020.

The carrier is already working with partner Singapore Airlines to boost codeshare connecting traffic between India and New Zealand, and the carrier also intends to codeshare with Air India. This will help ensure that demand has developed by the time Air New Zealand begins direct service.

India flights are a long-term proposition, however. The airline will probably not be able to launch flights within the next two years due to its fleet constraints, Williams said.

Air New Zealand hopes to be able to start London service earlier than India, according to Williams. It is working to identify the best stopover point when it resumes service. The airline previously used Los Angeles for its stopover to London but is also examining other options.

The carrier had hoped to begin flying to London in about six months and secured slots at Gatwick Airport. However, the airline had to postpone its plans and return the slots because it was not confident it would have enough aircraft available, Williams said.