NZ6 wrote:

NZ launched IAH and it was nothing but success from day 1, in fact the route was at the year 5 plan within 18 months. ORD is commencing this year and is tracking very well also.

NZ have very strong foundations in LAX and SFO, you can almost include IAH in that also. Australia supplements North America nicely and will hopefully continue to do so.

My issue or concern has been around NZ's speed to access Eastern North America given their geographical advantage, IAH has been up for a long time. ORD should be active already, ideally NZ would be established in NYC by 2020 but that won't happen.

I agree. The real potential for NZ is to become the carrier of choice for all of Australasia to all of the Americas, and to do that there will need to be a serious diversification of destinations. I understand that they're taking a cautious approach, but the risk is that first mover advantage for some potential destinations may be lost if they tarry too long.

NZ6 wrote:

Look at Asia in compasison

... and that's even missing actually quite a few other routes within Asia-Pacific too, such as:

- AKL - CKG - TSN
- AKL - SUV
- AKL - SZX - XIY
- AKL - XIY - TSN

I would say though that quite a few of the Asian routes are seasonal and/or low-frequency.

Arguably a few of these aren't profitable either, and are subsidised (think CKG and SZX)?

Cheers,

C.

planemanofnz wrote:

NZ6 wrote:

Look at Asia in compasison

... and that's even missing actually quite a few other routes within Asia-Pacific too, such as:

- AKL - CKG - TSN
- AKL - SUV
- AKL - SZX - XIY
- AKL - XIY - TSN

I would say though that quite a few of the Asian routes are seasonal and/or low-frequency.

Arguably a few of these aren't profitable either, and are subsidised (think CKG and SZX)?

Cheers,

C.

Yeah I knew I missed a couple, couldn't think of them at the time so just posted what I had, looks cool none the less.

NZ6 wrote:

I've decided to share one of the areas where I believe NZ fails ... That is around the North American routes.

IMO, it's not that NZ is failing - they're doing a good job by launching IAH and ORD - it's just that, they arguably could be doing far more?

Any criticism of NZ on North America needs to also critique both the US3 and the QF Group - they arguably haven't tried enough at AKL.

If the AA - QF JV is approved by USDOT, DL will be the big gap here - the only one out of the US3 and the QF Group not in the corridor.

NZ6 wrote:

... ideally NZ would be established in NYC by 2020 but that won't happen.

I wonder if one way around this would be for NZ to convince UA to launch EWR - AKL on UA metal, within the NZ - UA metal-neutral JV?

Even if NYC won't have a UA 787 base by 2020, one option could be to route the new flight SFO / DEN - AKL - NYC - AKL - SFO / DEN?

IMO, NYC is the one route with urgency - I mean, QF is already at JFK (albeit not non-stop), and it would likely be profitable from day 1?

NZ6 wrote:

CHC

This is a topic we could discuss further - that is, whether the tide has turned over ~12 years, with CHC now able to sustain US services.

It's interesting that despite CHC seeing new flights to CAN, HKG, TPE and others in Asia, it is yet to see a seasonal flight to LAX / SFO.

IMO, this is an untapped opportunity. The market is strong. Seasonal flights may stimulate demand that wouldn't go through AKL / SYD.

Cheers,

C.

NZ6 wrote:

I defend a lot of what NZ do but have said before I don't agree with everything they do, I've decided to share one of the areas where I believe NZ fails.

That is around the North American routes. Well within the next decade we'll see a high number of ultra long haul routes from Australia deep into the USA. Not just the pitched SYD-NYC but you'll likely see routes like MEL-DFW, SYD-MIA, PER-LAX etc..

NZ launched IAH and it was nothing but success from day 1, in fact the route was at the year 5 plan within 18 months. ORD is commencing this year and is tracking very well also.

NZ have very strong foundations in LAX and SFO, you can almost include IAH in that also. Australia supplements North America nicely and will hopefully continue to do so.

My issue or concern has been around NZ's speed to access Eastern North America given their geographical advantage, IAH has been up for a long time. ORD should be active already, ideally NZ would be established in NYC by 2020 but that won't happen.

Typically Kiwi's don't access the USA via Australia but by 2025-2030 you may be more then likely be able access you end point in the States direct from Australia so you have risk of a u-turn in that Australian feed.

Imagine, CHC-SYD-MIA vs CHC-AKL-LAX-MIA or AKL-LAX-NYC v AKL-SYD-NYC

And will Australians do

MEL-AKL-IAH vs MEL-DFW-IAH?

Just a talking point, obviously NZ's fleet etc are restrictions and you don't want to grow too quick either given the business risk but it's something if I was CEO would focus more on.

Not suggesting for second this is how you plan routes but knowing how many American's visit NZ and the trade relationship between both countries don't you think this map looks thin over the states? Look at Asia in compasison

Compared to Asia they are longer routes. That said I do think NZ should move ahead with the A350 (if that is the aircraft they are going to choose) sooner rather than later to be able to get that first mover advantage for NY but also to improve the economics of ORD, and improve the overall fuel efficiency vs the 77E in the network. Unless they are dead set on the 77X, I’d be inclined to give the A350 a couple of extra points just for being available now rather than later. They could completely replace the 77E fleet by the time the 77X is even available (with the 77W fleet shortly afterwards).

DavidByrne wrote:

... the risk is that first mover advantage for some potential destinations may be lost if they tarry too long.

Yes and no - there are a few factors at play:

1. Some destinations simply aren't reachable from Australia, but are from AKL - think DEN, MEX and other hot and/or high airports.

2. Many destinations are Star hubs, which AA, DL and/or QF simply wouldn't launch themselves - think DEN, IAD, YYZ and others.

3. If QF starts launching ADL / CNS / OOL / PER - LAX and others, NZ has the option of launching CHC - LAX, which QF wouldn't.

I see the big battleground for the first-mover advantage being on the non-stop NYC service. Then, maybe LAS or SEA? Not many?

Cheers,

C.

Zkpilot wrote:

I do think NZ should move ahead with the A350 ... to improve the economics of ORD, and improve the overall fuel efficiency vs the 77E in the network.

Absolutely, and particularly so, given the rapid increase in the price of oil.

Cheers,

C.

NZ6 wrote:

NYC

I wonder whether NZ would fly to EWR or JFK - the article below seems to suggest JFK, but I'd always thought that EWR would be the front-runner, given UA's comparatively stronger presence there.

Thoughts?

See: https://www.stuff.co.nz/travel/10459364 ... o-new-york.

Cheers,

C.

Read into this comment from EK about AKL - DPS, what you will - "This taste for a premium product is also reflected in the interest we are getting for travel in Emirates premium cabins between Auckland and Bali," says Emirates’ New Zealand Regional Manager, Chris Lethbridge.

See: http://www.voxy.co.nz/national/5/313372.

The first DPS flight touches down on Friday, and will mark the resumption of EK 77W flights here after a hiatus of a number of years. It'll be interesting to see whether the DPS stop lasts, or is substituted for an alternative, like BKK / CGK / KUL / SIN, or the second flight just dropped.

Cheers,

C.

In case of interest, some new appointments have been made at New Zealand airlines of late:

1. NZ has appointed Carrie Hurihanganui to the newly created Executive role of Chief Ground Operations Officer.
2. S8 has appointed Glenys Coughlan (previously NZ's Manager of Strategic Planning) to its board as a director.

See:
- http://www.scoop.co.nz/stories/BU1806/S ... fficer.htm.
- http://3rdlevelnz.blogspot.com/2018/06/ ... rtise.html.

It'll be interesting to see whether NZ's new ground-focused role leads to new ground initiatives.

Cheers,

C.

It’s impossible to exaggerate the stupidity of the “Pacific Rim” strategy.

Much of it is based on stunning ignorance. Buenos Aires is somehow not an Atlantic port. North Asia is somehow closer than North America!

Whereas in reality, from Auckland, a flight to LAX is just forty one miles longer than a flight to Beijing.

We saw Houston hit its Year 5 market targets within the first three months on sale.

Yet Shanghai bled losses for ten years, and as soon as it became marginally profitable we saw competing Asian carriers enter the market to destroy NZ’s hard-won moderate profitability.

The reasons are plain obvious.

The Asian routes are either inbound low-yield package tourism and VFR (China) or low-yield outbound tourism (Bali).

North America and London have demand in both directions, including premium cabins.

Lastly, geography is everything.

Flights to and from North America include passengers originating or terminating in Australia, with its far higher economic demographics.

Flights to and from Asia simply don’t.

Air NZ has thrived in spite of the Pacific Rim strategy, not because of it.

Nouflyer wrote:

It’s impossible to exaggerate the stupidity of the “Pacific Rim” strategy.

Much of it is based on stunning ignorance. Buenos Aires is somehow not an Atlantic port. North Asia is somehow closer than North America!

Whereas in reality, from Auckland, a flight to LAX is just forty one miles longer than a flight to Beijing.

We saw Houston hit its Year 5 market targets within the first three months on sale.

Yet Shanghai bled losses for ten years, and as soon as it became marginally profitable we saw competing Asian carriers enter the market to destroy NZ’s hard-won moderate profitability.

The reasons are plain obvious.

The Asian routes are either inbound low-yield package tourism and VFR (China) or low-yield outbound tourism (Bali).

North America and London have demand in both directions, including premium cabins.

Lastly, geography is everything.

Flights to and from North America include passengers originating or terminating in Australia, with its far higher economic demographics.

Flights to and from Asia simply don’t.

Air NZ has thrived in spite of the Pacific Rim strategy, not because of it.

NZ never meant the "Pacific Rim" strategy to be interpreted literally as only cities bordering the Pacific Ocean - and has stated as much on occasion. It's a loose description that effectively means nonstop services only. The only people who appear to be (wilfully?) misinterpreting it are A-netters, as far as I can see.

NZ never meant the "Pacific Rim" strategy to be interpreted literally as only cities bordering the Pacific Ocean - and has stated as much on occasion. It's a loose description that effectively means nonstop services only. The only people who appear to be (wilfully?) misinterpreting it are A-netters, as far as I can see.

Exactly. And to be fair, there isn't much beyond that area that NZ would be considering even if it had never said anything like that. The profitable airlines worldwide are not wasting time with old-fashioned multi-stop routings to the ends of the earth. ET is one of the main carriers that still flies multi-sector routings as a way of growing a market. They eventually start nonstop as soon as their fleet and the market allows and the price they charge once they do goes up considerably.

Nouflyer wrote:

It’s impossible to exaggerate the stupidity of the “Pacific Rim” strategy.

Much of it is based on stunning ignorance. Buenos Aires is somehow not an Atlantic port. North Asia is somehow closer than North America!

I think the stupidity is in those who take it in it's literal sense. I mean, do we pull out of almost every destination as it doesn't meet the criteria and a "label"?

I mean the Sea of Japan, East China Sea, Philippine Sea, South China Sea, Coral Sea, Tasman Sea, Bass Strait, Indian Ocean are some of the other water ways around NZ ports which are not "Pacific". Read more than the title of the strategy to understand what you're actually talking about.

And yet Singapore Airlines and Emirates have built entire airlines on a long-haul two sector model connecting affluent First World cities.

I would argue very strongly that SFO should have been extended to Heathrow (rather than Hong Kong), as should Vancouver.

After all, SIA even flies Houston-Manchester!

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

Some valid points in the above discussion I have to agree. And yes, the 789 could have been put to work on some higher yield routes. But if its not as if there is an alternative aircraft for the tourist routes to DPS and SGN. And would you really have NZ exit SIN, EZE or PVG? I'd be interested to see some thoughts about destinations that NZ could tap into that are higher-yield in North America.

We've discussed SEA, and NYC previously. I see both as possibilities and NYC as a probability either with NZ metal or JV.

I doubt DEN, PHX or LAS would be high yield. So where else do people suggest? If we take IAD out of the equation assuming NYC is the priority there are no other Star Alliance hubs except for YYZ and ORD has answered that one already. So we are talking about destinations in their own right.

MIA could be interesting. Slightly closer to AKL than ORD. Affluent population. And gateway to the Caribbean. Has more service to South America than any other North American city. And then I am clutching at straws.

I can't think of another destination that could be on the radar. DFW is too close to IAH and already served by QF and a possible candidate for AA service into AKL if the JV is approved. SLC is a non-starter and likewise for ATL and DTW. BOS is too close to NYC. I highly doubt AC are going to tolerate NZ breathing down their neck on YVR-LHR but perhaps UAL might have tolerated NZ on SFO-LHR which is a bigger route demand wise.

NZ321 wrote:

I'd be interested to see some thoughts about destinations that NZ could tap into that are higher-yield in North America

IMO, AKL - EWR, AKL - SEA and CHC - LAX have high-yield potential for future.

Within Asia, I do think that AKL - ICN has the most untapped high-yield potential.

Cheers,

C.

Nouflyer wrote:

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

To clarify - do you actually know for sure that PVG is 1) VFR and package-tourism focused, and 2) low-yielding, for NZ?

IMO, there'd be a chunk of business traffic between AKL and PVG - big companies like Fonterra would use NZ over MU.

Separately, IMO, NZ is wise to spread itself - there's nothing worse than to put all of your eggs in one basket, like the US.

Cheers,

C.

planemanofnz wrote:

NZ6 wrote:

NYC

I wonder whether NZ would fly to EWR or JFK - the article below seems to suggest JFK, but I'd always thought that EWR would be the front-runner, given UA's comparatively stronger presence there.

Thoughts?

See: https://www.stuff.co.nz/travel/10459364 ... o-new-york.

Cheers,

C.

The so called “aviation expert” is an accountant for a small aviation firm in New Mexico.
JFK is the main “International” Airport for New York for sure but since EWR is a major hub for UA (and is located closer to the city) it would be the obvious and mostly likely choice.

Zkpilot wrote:

JFK is the main “International” Airport for New York for sure but since EWR is a major hub for UA (and is located closer to the city) it would be the obvious and mostly likely choice.

Very true, though I do note that UA is thinking about re-building itself at JFK, in some form - that may work in JFK's favour, in NZ's decision-making process?

See: https://www.flightglobal.com/news/artic ... fk-449086/.

Cheers,

C.

planemanofnz wrote:

Nouflyer wrote:

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

To clarify - do you actually know for sure that PVG is 1) VFR and package-tourism focused, and 2) low-yielding, for NZ?

IMO, there'd be a chunk of business traffic between AKL and PVG - big companies like Fonterra would use NZ over MU.

Separately, IMO, NZ is wise to spread itself - there's nothing worse than to put all of your eggs in one basket, like the US.

Cheers,

C.

I know that Shanghai had all those things going for it during the ten monopoly years that it made ten consecutive losses. Then it scraped into the black, only for Chinese carriers to decide to enter the market.

Shanghai is worth servicing. Just about. But more for the country than the airline: I think it should be a subsidised route like RAR-LAX or APW-LAX.

I think Denpasar is a total waste of a widebody.

There are umpteen First World sectors that NZ could fly which I’m certain would deliver far higher yields than Denpasar.

Zkpilot wrote:

planemanofnz wrote:

NZ6 wrote:

NYC

I wonder whether NZ would fly to EWR or JFK - the article below seems to suggest JFK, but I'd always thought that EWR would be the front-runner, given UA's comparatively stronger presence there.

Thoughts?

See: https://www.stuff.co.nz/travel/10459364 ... o-new-york.

Cheers,

C.

The so called “aviation expert” is an accountant for a small aviation firm in New Mexico.
JFK is the main “International” Airport for New York for sure but since EWR is a major hub for UA (and is located closer to the city) it would be the obvious and mostly likely choice.

The Tim Gorman that article is referring to is a spotter in Wellington, as he is correctly referred to in this other stuff article.

https://www.stuff.co.nz/travel/travel-t ... ing-tarmac

Hes apart of a couple of facebook groups but thats about the extent of it. So when you see that name in a stuff article, think of the journalism involved as below high school level.

OK Nouflyer

So I accept some of your sentiments about PVG. And clearly NZ has to have a toe-hold in China and a link into the CA network.

But with DPS - I think it wasn't such a silly idea at the time, frankly. NZ is a seasonal destination both inbound and outbound and somehow NZ has to utilize its fleet to the best of its ability given the operational environment and peaks and troughs. Indonesia is a hugely populous country in Asia and New Zealand had been without direct air links for a long time. That never make sense to me. Indeed, I was one of those who had to transit SIN every time I went to DPS (at least twice a year) because I have some family in Bali this has led to a fair few connections over the years and very lengthy journey to be frank). But now thgt EK is daily year round in the market the signal is it could be an obvious time for NZ to exit and redeploy the fleet to more revenue generating routes. I'm not sure this predicament indicates a failure of NZ management, however. They are well in the know about market trends and demands. And it may be that they second guess EK as having other motives (SIN, CGK, BKK) where slots are at a premium and so that is the issue that has brought DPS to the focus for EK and NZ will stay in because they know that within 12 months EK will move the route to another intermediate point between AKL and DXB. All interesting stuff. Meanwhile....

As to your last comment, that there "are umpteen first world sectors NZ could fly to which I'm certain could deliver far higher yields" please do illuminate us. Provide examples to back up your assertion. Which routes specifically? I considered a few in a previous post. What do you consider as viable and with what equipment? Please spell it out for us.

torin wrote:

Zkpilot wrote:

planemanofnz wrote:

I wonder whether NZ would fly to EWR or JFK - the article below seems to suggest JFK, but I'd always thought that EWR would be the front-runner, given UA's comparatively stronger presence there.

Thoughts?

See: https://www.stuff.co.nz/travel/10459364 ... o-new-york.

Cheers,

C.

The so called “aviation expert” is an accountant for a small aviation firm in New Mexico.
JFK is the main “International” Airport for New York for sure but since EWR is a major hub for UA (and is located closer to the city) it would be the obvious and mostly likely choice.

The Tim Gorman that article is referring to is a spotter in Wellington, as he is correctly referred to in this other stuff article.

https://www.stuff.co.nz/travel/travel-t ... ing-tarmac

Hes apart of a couple of facebook groups but thats about the extent of it. So when you see that name in a stuff article, think of the journalism involved as below high school level.

Indeed a worry but not surprising as we have discussed previously given trends in journalism . Sad.

What about QF on ADL-AKL-LAX and AA on MEL-AKL-DFW if the JV is approved?

LATEST EVENT
Air New Zealand's 2018 Investor Day presentation will be held on Thursday 14 June 2018 beginning 9am New Zealand Standard Time.

http://www.airnewzealand.co.nz/investor-centre

Should be more details about aircraft deliveries, leases etc.

PA515

Registrations for the first three Air NZ A321NEOs as follows:
ZK-NNA (msn 8496)
ZK-NNB (msn 8542)
ZK-NNC (msn 8573)

http://a320archive.com/production-list

The A320NEOs may get a separate sequence as ZK-NHA to NHZ and ZK-NQA to NQZ are also reserved, presumably by Air NZ.

PA515

PA515 wrote:

LATEST EVENT
Air New Zealand's 2018 Investor Day presentation will be held on Thursday 14 June 2018 beginning 9am New Zealand Standard Time.

http://www.airnewzealand.co.nz/investor-centre

Should be more details about aircraft deliveries, leases etc.

PA515

Nothing too exciting - the presentation is out here http://nzx-prod-s7fsd7f98s.s3-website-a ... 280962.pdf

The first replaced A320's on short haul will transfer to domestic, and it appears that some A321's will come into domestic as well (slide 52)

It appears the 772 replacements will be signed up after FY19 with an RFP out by September 30, 2018. No surprises that the 787, 777X and A350's are the key candidates.

Nouflyer wrote:

And yet Singapore Airlines and Emirates have built entire airlines on a long-haul two sector model connecting affluent First World cities.

I would argue very strongly that SFO should have been extended to Heathrow (rather than Hong Kong), as should Vancouver.

After all, SIA even flies Houston-Manchester!

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

entire airlines on a long-haul two sector model connecting affluent First World cities.

You're completely wrong here. While yes they do some multi leg flying their model is around predominantly single leg flying from their hub, SIN and DXB respectively.

Both are highly sought global brands and with that it brings and opportunity to maximize some 5th freedom routes such as you're stated SFO-LHR example on SQ (much like NZ has LAX-LHR). Other multi leg flying like EK's CHC-SYD-DXB is still targeting DXB as their Hub where CHC hasn't yet been able to get a CHC-DXB direct service. We've seen this transition at AKL recently.

NZ on the other hand is predominantly end of line, or close to end of line carrier i.e Long Haul to Short Haul - USA-Aussie is the most obvious example. The opportunity exists for NZ to do more in this area as both Asia and South America mature, but the cousin in Australia also has this opportunity.

Would love to read where you would have sent your 787's instead?

planemanofnz wrote:

NZ321 wrote:

I'd be interested to see some thoughts about destinations that NZ could tap into that are higher-yield in North America

IMO, AKL - EWR, AKL - SEA and CHC - LAX have high-yield potential for future.

Within Asia, I do think that AKL - ICN has the most untapped high-yield potential.

Cheers,

C.

Really keen to know how we're establishing where 'high yield' is? I'm not picking your post apart at all I'm just really curious as to what brings you to the conclusion that ICN is or would be high yield?

The modelling I've seen suggests it's a inbound VFR market and outbound is predominately low yield Europe bound traffic which now has all the Chinese carriers fighting over it. There is little to no outbound NZ and little business to Korea itself.

My opinion on ICN has changed from a few months ago and I now give ICN an opportunity now but given KE is in the market it makes it much much harder so would really need OZ to support it.

Also how would CHC-LAX perform better than AKL-LAX? whereas wouldn't you want to send the aircraft from AKL into ORD,IAH or NYC etc opening NZ direct into more ports in the States as apposed to have two services into LAX from NZ. Of course if AIAL delivered on their single terminal idea it would make the transit more attractive and capitalize on the high number of CHC-AKL flights.

I'd love to see LAX-AKL, IAH-AKL, ORD-AKL, NYC-AKL all arrive between 0430-0530 with a 0630 International to International 787 operated shuttle between AKL-CHC before we had more services ex LAX into NZ.

pbm wrote:

PA515 wrote:

LATEST EVENT
Air New Zealand's 2018 Investor Day presentation will be held on Thursday 14 June 2018 beginning 9am New Zealand Standard Time.

http://www.airnewzealand.co.nz/investor-centre

Should be more details about aircraft deliveries, leases etc.

PA515

Nothing too exciting - the presentation is out here http://nzx-prod-s7fsd7f98s.s3-website-a ... 280962.pdf

The first replaced A320's on short haul will transfer to domestic, and it appears that some A321's will come into domestic as well (slide 52)

It appears the 772 replacements will be signed up after FY19 with an RFP out by September 30, 2018. No surprises that the 787, 777X and A350's are the key candidates.

No, no real surprises but it's just an investor day presentation.

Worth noting though, slide 43 outlines "Pacific Rim" for those who have miss-understood it.

Slide 38 talks about network growth for the period 2019-2021 of +5-7%. A321's additional A320 on domestic, ORD and TPE kicking off in FY2019 and the 3rd SIN sector will absorb a lot of that growth, so don't get too excited for a while.

Long time lurker, first time poster, etc. etc.

I always find reading the Air NZ strategy presentation (and the follow-on comments here) interesting. While most of the presentation is the usual corporate boilerplate, I think they've smuggled something reasonably significant in there. Page 40 mentions using A321NEOs for domestic growth. Page 52 says that 3 of the current leased regional A320s will transfer to the domestic fleet, and that these 3 leased A320s will then be replaced by new A321NEOs by 2020. Page 55 announces significant additional capex to buy 3 NEOs for domestic (plus the deposits for the 77E replacements).

So, I conclude we're soon to see an announcement for 3 extra A321NEOs for the domestic fleet, over and above the 13 on order for the regional routes.

And while I'm in the mood to post, I've followed the yield back and forth since the days of the mooted Koruhub several years ago (yes, I've lurked a while...)

The evidence shows that NZ's margins are substantially better than those of SQ or EK and have been for years. For whatever reason, NZ's international route strategy focus on outbound and inbound leisure at various price points, on what are presumably lower-yielding city pairs, drives consistently higher profitability than competing on point-to-point between larger wealthier markets. NZ's usual margin of 15% or so puts it in the region of COPA, Alaska, Icelandair, Ryanair and the handful of other 'very profitable' airlines in the world, many of which are ULCCs.

My personal thoughts? The profitability of the inbound leisure passenger on PVG/KIX-AKL is less important than what they do when they arrive in New Zealand. Using simple math, 2x 789s worth of inbound tourists each day from East Asia will fill 4 A320s south out of AKL to CHC/ZQN a day later. The fares paid by those tourists on those domestic sectors will be solidly profitable. When combined with the 2x 777 or so of tourists from North America, NZ can send half a dozen full A320s to the South Island without picking up a single domestic passenger. This in turn allows them to offer great frequency, far superior to their point-to-point-dependent competitor, which of course is what then attracts their most profitable passenger, the domestic business flyer with Airpoints to collect and able to put the $800 flexible fare on the corporate card.

So I tend to look upon the inbound leisure flights as 'loss leaders' (although I expect that most, certainly the North American ones, are at least a little profitable in their own right) that will ultimately deliver for the airline primarily through their effect on the high-margin domestic network. A lucrative way to run an airline and very hard to compete against, and which I think is the real meaning behind the 'stuctural investments mean we will continue to perform well' waffle in the strategy presentation.

NZ6 wrote:

pbm wrote:

PA515 wrote:

http://www.airnewzealand.co.nz/investor-centre

Should be more details about aircraft deliveries, leases etc.

PA515

Nothing too exciting - the presentation is out here http://nzx-prod-s7fsd7f98s.s3-website-a ... 280962.pdf

The first replaced A320's on short haul will transfer to domestic, and it appears that some A321's will come into domestic as well (slide 52)

It appears the 772 replacements will be signed up after FY19 with an RFP out by September 30, 2018. No surprises that the 787, 777X and A350's are the key candidates.

No, no real surprises but it's just an investor day presentation.

Worth noting though, slide 43 outlines "Pacific Rim" for those who have miss-understood it.

Slide 38 talks about network growth for the period 2019-2021 of +5-7%. A321's additional A320 on domestic, ORD and TPE kicking off in FY2019 and the 3rd SIN sector will absorb a lot of that growth, so don't get too excited for a while.

From page 40, it does sound like we could expect an additional A321NEO order in the near future for domestic?

With the current A320CEO's that are going to get moved to Domestic, an tatitic to try chase TT away?

NZ6 wrote:

Nouflyer wrote:

And yet Singapore Airlines and Emirates have built entire airlines on a long-haul two sector model connecting affluent First World cities.

I would argue very strongly that SFO should have been extended to Heathrow (rather than Hong Kong), as should Vancouver.

After all, SIA even flies Houston-Manchester!

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

entire airlines on a long-haul two sector model connecting affluent First World cities.

You're completely wrong here. While yes they do some multi leg flying their model is around predominantly single leg flying from their hub, SIN and DXB respectively.

Both are highly sought global brands and with that it brings and opportunity to maximize some 5th freedom routes such as you're stated SFO-LHR example on SQ (much like NZ has LAX-LHR). Other multi leg flying like EK's CHC-SYD-DXB is still targeting DXB as their Hub where CHC hasn't yet been able to get a CHC-DXB direct service. We've seen this transition at AKL recently.

NZ on the other hand is predominantly end of line, or close to end of line carrier i.e Long Haul to Short Haul - USA-Aussie is the most obvious example. The opportunity exists for NZ to do more in this area as both Asia and South America mature, but the cousin in Australia also has this opportunity.

Would love to read where you would have sent your 787's instead?

Yes, Singapore Airlines and Emirates have business models involving well over 80% of passenger revenue coming from 2 sector passengers.

The O&D markets in both Dubai and Singapore are miniscule, whereas at least NZ1/2 carry a far higher proportion of single sector passengers.

The Emirates flights which are analogous to Auckland-Shanghai yield-wise are their far shorter high density routes to the subcontinent.

But half the passengers flying Dubai-Karachi originated at ports like London Heathrow and Manchester, where their suicide yields were offset by premium passengers flying the same first sector en route to Sydney or the Seychelles or Saudi Arabia.

Two sector flying allows the flag carriers of countries with less than 5 million inhabitants to balance loads and yields across multiple destinations. Being at “the end of the line” is an opportunity for Air NZ, not a handicap. After all, Dubai is only 30% of the way from Europe to Australia and Singapore is the equivalent at the other end.

NZ321 asks which First World sectors Air NZ could fly.

Well, I think that Virgin Australia’s ownership is completely dysfunctional and that the carrier is certain to fail.

And I still think the pre-9/11 Pacific Star / Australian Star model is the best one for Air NZ.

We all remember Branson trying to buy Ansett/NZ for $1 in late 2001.

I’d do the opposite.

I’d set up Pacific Star flying from SYD/BNE/MEL to LAX and SFO and HNL and to HKG. And extend NZ SFO to LHR.

And then I’d offer A$300 million to buy Virgin Australia.

Qantas accepts a 65-35 Australian market split with Virgin. That would do very nicely for Air NZ to basically double in size.

Nouflyer wrote:

NZ6 wrote:

Nouflyer wrote:

And yet Singapore Airlines and Emirates have built entire airlines on a long-haul two sector model connecting affluent First World cities.

I would argue very strongly that SFO should have been extended to Heathrow (rather than Hong Kong), as should Vancouver.

After all, SIA even flies Houston-Manchester!

When your home market is 4.5 million people near the bottom of the OECD per capita GDP, is VFR and package tourism from China the answer to anything?

The original 789 fleet has been squandered on suicide markets when it could have been earning a lot more revenue on flights between richer cities.

entire airlines on a long-haul two sector model connecting affluent First World cities.

You're completely wrong here. While yes they do some multi leg flying their model is around predominantly single leg flying from their hub, SIN and DXB respectively.

Both are highly sought global brands and with that it brings and opportunity to maximize some 5th freedom routes such as you're stated SFO-LHR example on SQ (much like NZ has LAX-LHR). Other multi leg flying like EK's CHC-SYD-DXB is still targeting DXB as their Hub where CHC hasn't yet been able to get a CHC-DXB direct service. We've seen this transition at AKL recently.

NZ on the other hand is predominantly end of line, or close to end of line carrier i.e Long Haul to Short Haul - USA-Aussie is the most obvious example. The opportunity exists for NZ to do more in this area as both Asia and South America mature, but the cousin in Australia also has this opportunity.

Would love to read where you would have sent your 787's instead?

Yes, Singapore Airlines and Emirates have business models involving well over 80% of passenger revenue coming from 2 sector passengers.

The O&D markets in both Dubai and Singapore are miniscule, whereas at least NZ1/2 carry a far higher proportion of single sector passengers.

The Emirates flights which are analogous to Auckland-Shanghai yield-wise are their far shorter high density routes to the subcontinent.

But half the passengers flying Dubai-Karachi originated at ports like London Heathrow and Manchester, where their suicide yields were offset by premium passengers flying the same first sector en route to Sydney or the Seychelles or Saudi Arabia.

Two sector flying allows the flag carriers of countries with less than 5 million inhabitants to balance loads and yields across multiple destinations. Being at “the end of the line” is an opportunity for Air NZ, not a handicap. After all, Dubai is only 30% of the way from Europe to Australia and Singapore is the equivalent at the other end.

And this alleged 80% of 2 sector flying is made up of 99.99% transiting in SIN? being a Hub carrier as apposed to end of line carrier?

Nouflyer wrote:

NZ321 asks which First World sectors Air NZ could fly.

Well, I think that Virgin Australia’s ownership is completely dysfunctional and that the carrier is certain to fail.

And I still think the pre-9/11 Pacific Star / Australian Star model is the best one for Air NZ.

We all remember Branson trying to buy Ansett/NZ for $1 in late 2001.

I’d do the opposite.

I’d set up Pacific Star flying from SYD/BNE/MEL to LAX and SFO and HNL and to HKG. And extend NZ SFO to LHR.

And then I’d offer A$300 million to buy Virgin Australia.

Qantas accepts a 65-35 Australian market split with Virgin. That would do very nicely for Air NZ to basically double in size.

And if this fails good bye Air NZ as you've massively over invested to the extent of several billion and launched into markets that are high risk, competitive let alone markets that are not you're own. There is no need to do this, NZ has been clear they want to feed Australian traffic over AKL to supplement long haul flying East of NZ.

They've also been clear in wanting to work with a partner (code-share now) within Australia to enable them to be more competitive within the business market on the Tasman

NZ doesn't need to have a fleet of 200 aircraft crossing the Pacific Ocean in 500 different directions. That's not the ultimate goal or not the measure of success they want. They're a New Zealand based Airline flying in and out of their home country using their geographical location to hub where we can but ultimately drive tourism inbound and outbound to key markets around the pacific while linking in key trade partners to build a financially strong, brand, airline and overall business (cargo, air-points, engagement, ground services etc) which returns year on year growth and positive bottoms lines which it's been able to achieve for a number of years now.

In other words have a fleet of 110 making $800m over a fleet of 220 and making $200 million.

Nouflyer wrote:

And then I’d offer A$300 million to buy Virgin Australia.

Qantas accepts a 65-35 Australian market split with Virgin. That would do very nicely for Air NZ to basically double in size.

Which is what we did with ANSETT and look how that turned out.

Nouflyer wrote:

And I still think the pre-9/11 Pacific Star / Australian Star model is the best one for Air NZ.

I’d set up Pacific Star flying from SYD/BNE/MEL to LAX and SFO and HNL and to HKG. And extend NZ SFO to LHR.

Pardon my ignorance, but what is this Pacific Star thing?

NZ321 wrote:

OK Nouflyer

So I accept some of your sentiments about PVG. And clearly NZ has to have a toe-hold in China and a link into the CA network.

In fact, NZ is making good money from PVG now. They are targeting the most affluent population whose spending ability is no different from someone coming from LAX. If you know a little about the history of Shanghai and its colonial past, it's the most open city of China and people from there accept and dig western brands much more than the rest of China. Think about BMW, LV, even Starbucks. Think about the new Starbucks Reserve in Shanghai selling a cup of Latte for $15. They all do exceptionally well in China. Yes, you can't compare income per capita between a developed country and China as the gap between the rich and poor is so huge, but the top percentage is formidable enough to guarantee the success of any western brand if they know who to target in a city with 25 million people. NZ has done that exactly and have left all the package tour groups to MU. I think they will replicate the same idea to TPE with the whole Taiwan's similar size population.

NZ in yesterday's investor day presentation indicated they would have added a second PVG flight if it weren't for some slot issues. PVG has been penalised by the Chinese government and they suspended its new slot allocations in the last year or 2 due to lack of on time departures. I believe this will be resolved and we will soon see a second daily PVG service at least seasonally, one which would be timed to connect with EZE. Suddenly, AKL is playing the same role as DXB as a transit hub between 2 long haul flights. Not too bad for an end of line carrier between 2 rocks at the end of the world. None of that would be possible if NZ only started this service yesterday.

https://www.nzherald.co.nz/airports/new ... 37&ref=rss

Time will tell now if residents use it actually use it and what the fare levels will be.

On one hand I'd like to see 3C succeed and operate as a smaller regional airline (more Kiwi that JQ) but a small part of my inner competitive side wants to see them exit.

I'm interested in the 91% of residents who supported the service being continued, did this question cover off it being paid for via local taxes and furthermore to the value mentioned? I would have thought most local councils in NZ have bigger issues to spend their money on and would highly doubt support would be this high.

Just a thought, there has been some criticism or general comments made about "Low Yield" routes over the last few months.

Firstly, do any of us actually know what the difference is between low and high yield is as per the books? - I mean in practical sense it's obvious, business class, premium economy or in scenarios where inventory is managed in a way which drives a higher price - i.e AKLSYD will see fewer entry level booking classes than AKLOOL, but if I asked what % defines low vs medium vs high would anyone be able to say?

Secondly, potentially it's been portrayed that low yield is a failure or is something only a bad airline would target or attract.

I'll name two airlines which should correct this line of thinking, Southwest & Ryan Air. Although they are not as prestigious as the likes of Emirates & Qatar, which is an intention, to their investors or anyone interested in making money (let's not forget that's what any business is ultimately trying to achieve) they are actually more successful.

Ryan Air Profit USD $1.5b
Emirates Profit: USD $631m

https://www.theguardian.com/business/20 ... ting-fares
https://www.emirates.com/media-centre/e ... or-2017-18

So NZ flying into so called "low yield" routes isn't actually a bad thing if they're able to build demand, drive higher revenues and keep costs down. I'm privy to some business cases and where a routes can easily achieve profits of $40-80m (NZD) why wouldn't you fly there? even if it gets labelled "low yield"?

NZ6, UI agree with your last post.
I think most New Zealand routes are not high rankers in the global passenger yield charts of the airlines that fly here (although the premium economy has help made those airlines who have it a bit more dense on yield). Even the "high yield routes that get mentioned are middle of the road. If there's any business case for a profit to be made after operational overheads then New Zealand is lucky to have the routes it has, many airlines can't justify the numbers they make vs operating costs. for NZ, their knowledge of their home market and natural hometown advantage and economy of scale (fleet and crew base) affords them a little more operational wiggle room for occupying that space been marginal and profitable. Other carriers would not necessarily be able to make the same business case. If a route can individually post a profit then it can justify itself as part of a network (and enhance the overall network.

DUDtoDFW wrote:

Long time lurker, first time poster, etc. etc.

I always find reading the Air NZ strategy presentation (and the follow-on comments here) interesting. While most of the presentation is the usual corporate boilerplate, I think they've smuggled something reasonably significant in there. Page 40 mentions using A321NEOs for domestic growth. Page 52 says that 3 of the current leased regional A320s will transfer to the domestic fleet, and that these 3 leased A320s will then be replaced by new A321NEOs by 2020. Page 55 announces significant additional capex to buy 3 NEOs for domestic (plus the deposits for the 77E replacements).

So, I conclude we're soon to see an announcement for 3 extra A321NEOs for the domestic fleet, over and above the 13 on order for the regional routes.

Then page 55 hides this little line down the bottom "excludes orders of up to five A320/321NEOs with purchase substitution rights", something that NZ has had to declare of the past two years.

So effectively they have 13 confirmed and committed orders, plus an further 5 that they have not had to commit to firm yet. I'd expect so see these 5x 321NEO's be used to grow domestic, e.g. 3x FY20 and 2x FY21.

The current A320CEOs for International are delivered between 2003 and 2008 (ZK-OJA-OJO), then Domestic 2011-2016. Based on this if they go ahead an replace the domestic A320s at 10-12 years old like the International fleet - we'd likely see this start around 2021/2022.

xiaotung wrote:

NZ321 wrote:

OK Nouflyer

So I accept some of your sentiments about PVG. And clearly NZ has to have a toe-hold in China and a link into the CA network.

In fact, NZ is making good money from PVG now. They are targeting the most affluent population whose spending ability is no different from someone coming from LAX. If you know a little about the history of Shanghai and its colonial past, it's the most open city of China and people from there accept and dig western brands much more than the rest of China. Think about BMW, LV, even Starbucks. Think about the new Starbucks Reserve in Shanghai selling a cup of Latte for $15. They all do exceptionally well in China. Yes, you can't compare income per capita between a developed country and China as the gap between the rich and poor is so huge, but the top percentage is formidable enough to guarantee the success of any western brand if they know who to target in a city with 25 million people. NZ has done that exactly and have left all the package tour groups to MU. I think they will replicate the same idea to TPE with the whole Taiwan's similar size population.

NZ in yesterday's investor day presentation indicated they would have added a second PVG flight if it weren't for some slot issues. PVG has been penalised by the Chinese government and they suspended its new slot allocations in the last year or 2 due to lack of on time departures. I believe this will be resolved and we will soon see a second daily PVG service at least seasonally, one which would be timed to connect with EZE. Suddenly, AKL is playing the same role as DXB as a transit hub between 2 long haul flights. Not too bad for an end of line carrier between 2 rocks at the end of the world. None of that would be possible if NZ only started this service yesterday.

true but I know many Chinese that view NZ's product as inferior and Fly CX, with 17 flights a day to HKG and stellar lounges is no big deal for them.



NZ n

Kashmon wrote:

xiaotung wrote:

NZ321 wrote:

OK Nouflyer

So I accept some of your sentiments about PVG. And clearly NZ has to have a toe-hold in China and a link into the CA network.

In fact, NZ is making good money from PVG now. They are targeting the most affluent population whose spending ability is no different from someone coming from LAX. If you know a little about the history of Shanghai and its colonial past, it's the most open city of China and people from there accept and dig western brands much more than the rest of China. Think about BMW, LV, even Starbucks. Think about the new Starbucks Reserve in Shanghai selling a cup of Latte for $15. They all do exceptionally well in China. Yes, you can't compare income per capita between a developed country and China as the gap between the rich and poor is so huge, but the top percentage is formidable enough to guarantee the success of any western brand if they know who to target in a city with 25 million people. NZ has done that exactly and have left all the package tour groups to MU. I think they will replicate the same idea to TPE with the whole Taiwan's similar size population.

NZ in yesterday's investor day presentation indicated they would have added a second PVG flight if it weren't for some slot issues. PVG has been penalised by the Chinese government and they suspended its new slot allocations in the last year or 2 due to lack of on time departures. I believe this will be resolved and we will soon see a second daily PVG service at least seasonally, one which would be timed to connect with EZE. Suddenly, AKL is playing the same role as DXB as a transit hub between 2 long haul flights. Not too bad for an end of line carrier between 2 rocks at the end of the world. None of that would be possible if NZ only started this service yesterday.

true but I know many Chinese that view NZ's product as inferior and Fly CX, with 17 flights a day to HKG and stellar lounges is no big deal for them.



NZ n

I am sure most still value a direct flight rather than a connection via HKG. Even if they do fly over HKG, it still falls under the NZ/CX JV, right?

NZ has a last decade product now not just on PVG and most top airlines have better seats. I am disappointed NZ didn't choose to revamp their cabin on the most recent 789's. Perhaps the dry leased 77W from BR will give NZ customers a taste of what a Zodiac Cirrus seat feels like. By the way, NZ management thinks the Zodiac seat is comparable to what NZ currently has but I thought it was a much better product. Maybe it just comes down to personal preference.

Nouflyer wrote:

NZ321 asks which First World sectors Air NZ could fly.

Well, I think that Virgin Australia’s ownership is completely dysfunctional and that the carrier is certain to fail.

And I still think the pre-9/11 Pacific Star / Australian Star model is the best one for Air NZ.

We all remember Branson trying to buy Ansett/NZ for $1 in late 2001.

It was actually Air NZ (via Sir Selwyn Cushing "NZ's version of Borghetti" - the chairman of the then company that owned NZ at at the time) trying to buy Virgin for $1.

Branson was shown on-screen ripping up the cheque from Air NZ

Nouflyer wrote:

I’d do the opposite.

I’d set up Pacific Star flying from SYD/BNE/MEL to LAX and SFO and HNL and to HKG. And extend NZ SFO to LHR.

And then I’d offer A$300 million to buy Virgin Australia.

Qantas accepts a 65-35 Australian market split with Virgin. That would do very nicely for Air NZ to basically double in size.

Air NZ tried that by buying Ansett. The current management knew how that turned out and I'm sure everyone knows that they don't want to follow their predecessor's mistakes.

NZ's "Borghetti" aka Sir Selwyn Cushing bought the rest of Ansett by using their "first rights refusual" to block SQ from buying the other 50% from News Corp, despite fully knowing that his company didn't have the capital to fix a ailing AN at the time. All purely because of ego at the time.

AN pre-NZ was fully neglected by News (really only bought AN in 80s to get access to the TV station) and was completely stuffed by TNT buying a "United Nations" mixed fleet.

https://australianaviation.com.au/2018/ ... r-in-2019/

Not sure if there is anything new in here but the 787-10 has been mentioned a couple of times more recently.