Air New Zealand appears to be relishing its new monopoly position on services to the United States, but experienced a sharp drop in demand on its domestic network last month.
Air New Zealand has benefited from the loss of competition on routes to mainland United States after sole competitor Qantas pulled out of the Auckland to Los Angeles route in May.
The largely state-owned airline responded by filling the gap left by Qantas with extra services.
Demand on North America and Britain services was up 6.5 per cent in August compared to the same month last year.
That was met with a capacity increase of 2.1 per cent allowing Air New Zealand to fly its planes nearly 85 per cent full on the route, helping to improve profits.
Air New Zealand is facing a new competitor between Auckland and Honolulu with the arrival of Hawaiian Airlines in March next year.
Air New Zealand's long haul network had been losing $1 million a week. But outgoing chief executive Rob Fyfe said at the airline's profit announcement last month that the long-haul market would return to profit this year after a restructure of the network found the targeted $110 million profit improvements two years ahead of schedule.
Demand on flights to Asia, Japan and on to Britain was up 3.5 per cent with 4.7 per cent capacity being added.
August was also the first month that passenger numbers on Japan services returned to pre-earthquake levels, Air New Zealand said.
Total long haul demand was up 5.2 per cent against capacity increases of 3.2 per cent resulting in planes flying 82.6 per cent full on average.
Domestically a 3.8 per cent drop in demand in August on the same month last year was met with a smaller reduction in capacity.
Air New Zealand said domestic travel in August last year was busier than usual as passengers travelled ahead of the Rugby World Cup.
On the Tasman and Pacific routes demand increased 6.4 per cent while capacity was boosted by nearly 10 per cent.
The changes were mainly due to the introduction of flights to Bali and extra capacity on services to Honolulu and Perth, the airline said.
Total long haul demand was up 5.2 per cent against capacity increases of 3.2 per cent resulting in planes flying 82.6 per cent full.
Group yields for the financial year to date were down 1.2 per cent on the first same two months last year.
While short haul yields were down 4 per cent, long haul routes were up 3.4 per cent.
- © Fairfax NZ News