Suspended services creating turbulence for Air NZ, passengers
TIts’ a sign of the times with Chicago being pulled temporarily in light of the level of competition. Andy Bowley
ravel agents are scrambling to rebook thousands of passengers affected by Air New Zealand’s pause of flights between Auckland and Chicago this winter.
The airline will suspend its threetimes-a-week service from March 31 for six months, affecting more than 13,400 passengers. This is on top of hundreds of thousands impacted by engine issues affecting two other international services and its domestic routes.
It comes at a critical time for the airline that has a gloomy financial outlook for the current six months and has said it is facing higher costs such as wages, now spread over a shrunken network this winter.
The pause on Chicago also comes as the airline faces increased competition to North America from big United States airlines that have been flying to this country, rather than putting planes back on routes to China, a market slower to recover from the pandemic.
Auckland Airport says competition has resulted in a 12 per cent fall in fares on North American routes.
Air NZ chief executive Greg Foran said following the release of its halfyear result last month, that the airline didn’t want to be the first to blink and take capacity off US routes where there has been significant discounting. But one analyst said this has now happened.
One travel agent said the impact of the Chicago move was significant and came on top of the suspension of services to Hobart and Seoul announced last year, also due to engine maintenance issues.
The announcement to pause Chicago was made last week and this meant a scramble to change passengers’ plans, House of Travel chief operating officer Brent Thomas said.
“The issue is, the airline ticket is only one component and there are many land arrangements that need to be organised as well. From an agent perspective, we’re busy doing rescheduling right now.”
Air NZ chief customer and sales officer Leanne Geraghty said the route was an important part of the overall Air NZ network and has been paused as it worked through the availability of serviceable aircraft engines.
“There are no other routes at risk. We have made the decision to pause Chicago (where it started flights in 2018) as it had the least impact on customers and our operations and enables us to ensure we can get customers to their destinations on our wider network over the coming six months,” she told the Herald.
Customers with bookings on Chicago services will be rebooked with a connection through another US airport to get them to their destination as quickly as possible.
Customers who booked directly with Air NZ have been issued with new itineraries during the past week.
Customers could opt to receive a full refund or place their booking into credit. Air NZ provides 35 services a week to other US and Canada destinations.
When it announced the pause, Geraghty said it was a “difficult decision to make,” but it resulted in the least number of customers impacted.
“We know this will be disappointing for customers travelling to and from Chicago during this period, especially to those travelling over the upcoming April holiday break. It’s not a decision we’ve made lightly and we’re sorry to make this change so close to the time some customers plan to fly.”
Air NZ continues to be impacted by fallout from limited availability of Rolls-Royce Trent 1000 engines, meaning up to three aircraft of its
14-strong Dreamliner fleet will be unavailable for an extended period.
The long-running Rolls-Royce engine issue continues to plague all airlines using them after turbine blade issues came to light in 2018.
Air NZ has said Rolls-Royce Trent
1000 engines normally require heavy maintenance, where they are taken off the aircraft and sent to the offshore manufacturer for inspection, after 1000 engine cycles (take-offs and landings).
During regular inspections, Air NZ engineers identified that the engines required maintenance after 750-850 cycles. Rolls-Royce has been unable to provide Air NZ with spare or replacement engines to deliver the level of service needed, leading to a reduction in the amount of flying Air NZ can deliver via its 787 fleet. It has opted for GE engines on the coming order of eight new Dreamliners.
The Rolls-Royce issue was behind the pause of its Auckland-Seoul route (from April 1) but it was another engine problem that forced the suspension of Auckland-Hobart services from April 5.
Pratt & Whitney (P&W) engines are spending longer off wings of A320/321 aircraft than expected which could ground up to five of its A320s at any one time for up to two years. Last year it said more than 300,000 passengers would be affected, some would be on a different plane and wouldn’t notice it while others would face disruption through new flight times and cancellations.
The analyst’s view
Forsyth Barr’s head of research Andy Bowley said the decision to pause Chicago was logical.
“Air NZ are good custodians of their network, in that context the decisions they’ve made in recent times reflect network optimisation.”
North America had been the shining light of its international network as it recovered from the pandemic but American Airlines and United Airlines had returned strong to this market and Delta Air Lines had started year-round services for the first time.
“It’s a sign of the times with Chicago being pulled temporarily in light of the level of competition and the reduced demand that they’re experiencing on American routes at the moment,” he said.
“They have blinked. It’s unfortunate in terms of broader market position, if it has any lasting impact.
“It’s only a temporary helps in that regard.”
Any schedule disruption put added strain on airline operations, Bowley said.
Another commentator said Air NZ’s suspension of Chicago allowed rival airlines to take more passengers off it.
The Americans came
Auckland Airport said there was a 58 per cent increase in available seats to mainland North America over summer 2023/24 compared to the previous period.
There were 500,000 travellers between mainland North America and Auckland, from November last year to February, with half the arrivals from the US.
Most US visitors travel here in summer and autumn, stay up to two weeks and spend close to $6000 per person on average.
Scott Tasker, chief customer officer at Auckland Airport, said the mix of exciting new routes and additional carriers had cracked open the North American market, creating airfare competition and driving the demand.
“There’s been 20 per cent more New Zealanders and a whopping 56 per cent increase in Americans and 14 per cent increase in Canadians flying the North American routes over summer. The market is now bigger than it was in 2019,” Tasker said.
“Between October and March, seven airlines have been flying nonstop to eight North American cities from Auckland.”
Between March to October, the Northern Summer aviation season, four airlines will continue flying nonstop between Auckland Airport and six North American cities.
“The capacity and competition have really benefited travellers with some great fares, which overall are down 12 per cent,” said Tasker.
“There’s never been more seats available between Auckland Airport and North America, and what we’re seeing is travellers are really taking advantage of this,” he said.
The Los Angeles route had gone from one airline — Air NZ — flying once a day last summer, to having Air NZ, American Airlines, Delta and United Airlines flying four times a day.
“The Californian market has traditionally been strong for inbound tourism and when we look at the 40 million-odd Americans who had New Zealand at the top of their travel bucket list, more than 20 per cent call California home. We’ve seen that flow through into traveller numbers with a 200 per cent increase in US nationals on the route this summer.”