Chinese tourist numbers down but quality up

Hong Kong airline Cathay Pacific is poised to take advantage of the maturing Chinese travel market to New Zealand, despite a Chinese government crackdown on tour operators hurting passenger numbers on the route.

New Zealand's airports have enjoyed 18.7 per cent growth in arrivals from mainland China, but their number dropped by 12 per cent in October, and 15.8 per cent in November, compared to the same months in 2012.

Statistics New Zealand, Tourism New Zealand and Cathay Pacific all put the slump down to a new law banning Chinese tour operators from offering low-cost "shopping tours", which took effect in October.

Tourism NZ chief executive Kevin Bowler said despite the drop in Chinese visitor numbers in recent month, the quality of Chinese visitors was improving.

Although October and November short-stay holiday group visas were down by 41 per cent, long-stay group holiday visas were up 14 per cent and individual visitor visas were up by 70 per cent.

"That's indicating a shift to a better quality visitor and their visitor experience," he said.

Cathay Pacific's New Zealand head Brian Tsoi said the airline was well placed to grow the high-value independent Chinese traveller market.

"Rather than cheap, subsidised shopping tours . . . these independent travellers will demand a quality New Zealand experience. These are the tourists New Zealand needs as they will spend money on hotels and tourist activities," said Tsoi.

Despite the recent drop in Chinese arrivals, Cathay began its seasonal twice-daily service between Auckland and Hong Kong at the start of this month, connecting to 22 destinations in mainland China, which is key for New Zealand's inbound tourism market.

Auckland International Airport general manager of aeronautical and commercial, Glenn Wedlock, said Cathay had successfully leveraged a marketing campaign and its subsidiary Dragon Air's Chinese network to boost independent travellers from China to New Zealand.

"Most people would be surprised to know that Hong Kong is now New Zealand's largest international route, with over 400,000 passenger movements in the last year. That's more than we see on the Los Angeles route," he said.

The airline's three-year alliance with Air New Zealand has also just marked its first year and includes Cathay Pacific taking Air New Zealand passengers on to London via Hong Kong. Air New Zealand pulled its loss making Hong Kong to London service in March this year.

Cathay said the agreement had been a success and there was "every intention" that it would be renewed in 2015.

Some Air New Zealand shareholders voiced their opposition to the agreement at the airline's annual meeting in October, complaining that the alliance meant having to switch to Cathay if they wanted to fly to London via Hong Kong.

Cathay also introduced a premium economy cabin in December across its fleet, allowing it to match Air New Zealand's range of seating options.

Cathay's managing director of product, Toby Smith, said the addition of premium economy was driven by the need to bridge the growing gap between lie-flat business class seats and standard economy. "If you're looking at a long haul 24-hour flight, London to Auckland, people do care about comfort and leg room and that's why we didn't just spread the seats apart, we built the seat from the ground up."

A return flight between Auckland and London in the premium economy cabin costs $2400 more than a standard economy return fare. Smith said load factors and yields in existing premium economy cabins indicated that passengers were prepared to pay double the standard economy fare.

Smith said the seat was particularly popular among New Zealand small businesses and retired travellers who were willing to pay more for space and comfort.

Smith said the booming economies and rising middle classes of China and India nearby meant that Hong Kong and Cathay would remain a global transport hub, even if high-end Middle Eastern carriers were challenging the city's status as a preferred stopover.

"We are five hours flying time away from half the world's population, so geographically we have huge advantages.

"Hong Kong as a stopover destination and through-port is so efficient, you can reliably leave the airport and 20 minutes later be in the heart of Hong Kong."