Airlines — the flock regroups

More choices for passengers as capacity heads for half of pre-Covid level

Planned airline capacity to New Zealand is climbing towards a critical milestone — nearly half of what it was before the industry was devastated by Covid-19.

Board of Airline Representatives executive director Justin Tighe-Umbers says he met airline bosses this week and there is fresh optimism.

“It’s hugely positive. We’ve got the border open to 60-plus countries so there’s definitely a change in atmosphere amongst all the airlines and it’s great to see a bit more of a spring in the step,” Tighe-Umbers said. “And flights are full. We’re hearing there is good strong demand coming through, so that’s really positive.”

The latest airline to return is Air Tahiti Nui, which yesterday welcomed Kiwi passengers back on board after a two-year hiatus.

In spite of Covid-19 rules for incoming passengers and no certainty about when visitors from China and India will be allowed back into the country, TigheUmbers said he was surprised by the strength of the recovery.

“We’ve only got visibility ’til the end of the season — the end of October — but it’s certainly stronger than what I thought it would be. In terms of total market, it is just about hovering around half of where we were in 2019.”

During the past month, airlines including Air Canada and Hawaiian Airlines have announced re-start dates for this year and Air New Zealand is rebuilding its international network.

Tighe-Umbers said transtasman capacity was getting close to half of what it was prepandemic, with Qantas and Jetstar adding flights. There was no sign yet of Virgin Australia. Although the airline has signalled it wants to fly into Queenstown this year, he said it was concentrating on its more lucrative and less-risky Australian domestic market after shutting down its Christchurch base soon after the pandemic hit in March 2020.

“I think for them, the Australian domestic market is incredibly strong and they’ve got aircraft that can fly in either the Tasman or domestically, so I think we’ll be in competition there.”

Testing times

While the removal of isolation requirements for vaccinated travellers from Australia last month and 60 visa-waiver countries on Monday was a big boost, it didn’t go far enough, he said.

“I think they’re the main concerns . . . [airlines] really want to see pre-departure testing [in other countries before flying] removed. New Zealand is just increasingly an outlier now compared to the rest of the world in needing it.”

The United States has the same pre-departure rule as New Zealand but many other countries — including Australia, Britain, much of Europe, Singapore and some Pacific countries — have done away with it. The Government is concerned about the pandemic’s path coming into winter, but has said its predeparture requirement was being scrutinised.

Tighe-Umbers said: “The worry is that complexity of travel that it brings will just make other destinations that don’t have it much more attractive.”

Heavy penalties have already been imposed for those who don’t follow the rules.

The infringement offence fee for failing to meet pre-departure test requirements is $1000, and the infringement offence fee for failing to produce sufficient evidence of a pre-departure test or medical exemption is $500.

Tighe-Umbers said given New Zealand’s tough stance on Covid during the past two years, airline members had reported some confusion among arrivals over what to do if they test positive for Covid-19. The rule is that they must isolate for seven days, the same as a community case in New Zealand.

“So I think if you’re going into a country where that’s not an issue on holiday, then that starts to give you a bit confidence to go there. I’m not sure they know what to expect if they report they’ve got Covid. I’m just not sure that messaging is quite strong enough.”

There was no clarity yet on when visitors from China and India, who require a visa, will be allowed back into New Zealand. Before the pandemic, they accounted for about 13-15 per cent of visitors, and at this stage are not expected back in the country until later in the year.

“Certainly we want to see [a decision on] visa-required travellers brought forward. It’s sitting at October, although we’re seeing signs there might be a decision coming on that soon.”

Tighe-Umbers said the strength of the recovery would depend on how airlines regarded this market compared to others.

“We’re in competition with the rest of the world and that’s another reason why we need to make it simple to get here and get rid of pre-departure tests.”

Air Tahiti Nui Pacific general manager Daniel Eggenberger said the airline’s first post-pandemic flight included a mix of re-booked passengers from the past two years and new travellers eager for a tropical getaway.

“While the inbound flights are already especially heavily booked, outbound flights are picking up quickly. We expect this to increase in the coming weeks, especially as travellers reinstate pre-pandemic cruise, resort, and tour bookings.”

The cost equation

Around the world, average airfares were increasing and flights to and from New Zealand were no exception to that, said TigheUmbers. “I think airfares are a little bit higher than what they have been in 2019, particularly when flights are full, of course. I think travellers need to move pretty quickly to get some of the early specials.”

Labour costs, airport, Airways and border agency charges were going up or under review. The border levy for arrivals doubled late last year to $38.

“Fuel thankfully seems to have stabilised a little bit, so there’ll still be some good deals to be had.”

Airlines were monitoring the tightness of the labour market.

“From the people who load your bags, who check you in and who do your security check, through to Customs, that requires quite a lot of headcount and the ability to scale that as flight volume goes up is open to question at the moment,” Tighe-Umbers said.

We’re hearing that recruiting into the industry is a bit challenging. I think that’s due to the very tight labour market and ultimately [workers] may be looking at the sector and asking is it stable enough yet.”

Southern gateway

Christchurch Airport will benefit from the rebuild, which includes more transtasman flights, possibly including more Singapore Airlines flights from the middle of the year. Also in the plan is the return of Emirates’ A380s to this country.

Aeronautical and commercial officer Justin Watson said: “Initially we are seeing good demand from New Zealanders heading overseas and people visiting friends and family. However, it’s the international visitors that we need to see return.”

“Encouragingly, the things that have always attracted visitors to the South Island are still here, and indications are there’s still a lot of interest from people to come and enjoy the experiences and scenery of our part of the world,” Watson said.