Lower fares, better ride likely with Airbus fleet

14 New Planes For Air New Zealand

Relevant offers

Industries

Keeping with the 100% Pure message Fonterra sells stake in AFF joint venture Telecom granted more time for info systems separation Lamb, beef and dairy prices Report calls for Govt backed exploration business Capital controls not the answer Trans-Orient to drill for oil Debt soaks up milk payout Key rejects Goff's call for changes to monetary policy Five Mile venture sold to Aucklander

Air New Zealand's decision to replace its domestic jet fleet with larger planes is expected to lead to lower fares and provide a more comfortable ride for passengers.

The airline has bought another 14 Airbus A320s, worth more than US$1 billion (NZ$1.39b) at list prices, as part of its replacement plan for the 737-300 fleet.

Head of short haul airlines Bruce Parton said the airline had extracted discounts reflecting the lack of demand for new planes, and an intense eight month battle for the order between rivals Airbus and Boeing.

The twin-engine, single-aisle planes will be delivered over five years from January 2011 as the leases on the 737s run out. They will join 12 A320s Air New Zealand has been flying on the Tasman and Pacific Island routes since 2003. An Air New Zealand A320 crashed into the Mediterranean Sea off France a year ago during a routine test flight, killing all on board.

It is likely the new planes, to be fitted with a more fuel-efficient variant of the IAE V2500 engine, will replace the current A320 fleet which will in turn be moved to the domestic network.

"It is most likely that we will look to put the planes where the most advantage is," Mr Parton said.

The domestic A320s would be configured with 171 seats compared with the 133-seat Boeings, which are on average about 12 years old.

Cabin designs were still to be finalised, but seats with extra leg room for frequent fliers in the front half of the plane would be retained.

Passengers also preferred the extra width of the A320, which allowed about 2.5 centimetres of extra seat width or a wider aisle, Mr Parton said.

House of Travel retail director Brent Thomas said the bigger aircraft would help ease some of the domestic capacity constraints at peak times.

"There is potential there is going to be more airfares in the lower class of fares."

Grant Avis of Gilpin Travel said business customers would welcome the A320's improved cabin over the existing Boeings.

More seats to fill and greater fuel efficiency also would put pressure on the more expensive fares bought by business travellers, he said.

Mr Parton said deliveries could be hurried up if demand warranted, and the deal also included an option on 11 additional aircraft at current prices.

Moving to an all-A320 short haul fleet would reduce maintenance and training costs as well as create a single pool of pilots that could fly both domestic and international services.

The A320 also allowed luggage and freight to be preloaded into containers, improving efficiency.

The purchase continues a run of good buying for Air New Zealand, which also secured its replacement Boeing 777 and 787-9 long haul fleet at market-low prices in recent years.

"So this has really set us up for 20 years of having lower-cost aircraft than our size would dictate," Mr Parton said.

It also allowed Air New Zealand to at least match the aircraft cost base of domestic budget competitors Jetstar and Pacific Blue, which already fly modern, similar-sized aircraft.