More Air New Zealand deals expected

WILLIAM MACE
Last updated 12:51 06/11/2012

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Air New Zealand's axing of flights between Hong Kong and London is the catalyst for a much larger partnership with Cathay Pacific as airlines continue to consolidate amid difficult market conditions.

The NZX-listed national carrier has said it will no longer fly between Hong Kong and London because it believed the route would not be profitable "for the foreseeable future". The cut means approximately 70 London-based cabin crew roles are expected to go.

Air New Zealand would stop flying the route from March 4 next year, with most of the 8000 passengers affected by the change to be rebooked onto Cathay Pacific flights.

The company said the link with the Hong Kong-based Cathay Pacific demonstrated a new "strategic agreement", effective from December 12, which was in line with its strategy to "implement an alliance based network with a Pacific Rim focus".

Air New Zealand chief executive Rob Fyfe said the code-share would serve to open up excellent connections between New Zealand and Mainland China.

But House of Travel commercial director Brent Thomas said Europe could be next on the list of territories that the partnership could open up. Most airlines around the world were looking for code-sharing agreements to extend their reach into such territories, he said.

"What we can tell from the way New Zealanders are travelling is a lot of them are looking to go into London but then come out of a European port," Thomas said.

"That makes it difficult for Air New Zealand at times because to fly there and back on Air New Zealand you have to go in and out of London."

While customers would benefit from more choice and flexibility in the flights and destinations, Thomas did not believe the link with Cathay Pacific would have any affect on airfares.

Fyfe said both airlines would continue with their existing frequency of flights between Auckland and Hong Kong while introducing the flexibility of code-share flights.

Air New Zealand operates daily year round services between Auckland and Hong Kong while Cathay Pacific operates daily year round services and up to double daily in the peak period between 2 December and 1 March.

Air New Zealand customers would now earn Airpoints on Cathay Pacific flights between Auckland and Hong Kong, and Airpoints and Koru members travelling on Air New Zealand flight numbers would receive lounge access and premium customer benefits on the route.

Thomas said it was not surprising that Air New Zealand was hunting similar partnerships to Qantas' tie-in with Emirates, he said.

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"The air industry is incredibly competitive, there are very low margins so they're having to look for these opportunities to make their businesses more profitable."

Fyfe told analysts last year that no stone would be left unturned as part of the comprehensive review of its long-haul business, which was losing $1 million a week, including the possibility of pulling out of London.

Earlier this year Fyfe ruled out axing the flagship route, saying Air NZ would respond by better matching capacity to reduced passenger demand on the London service via Hong Kong and Los Angeles.

- BusinessDay.co.nz

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