Don\u2019t look now, but Air New Zealand (ANZ) is in expansion mode. In early March, the airline announced the resumption of flights to Osaka this coming November, ending a three-year hiatus that began when its Japan flights were consolidated in Tokyo during a weak market.
\nThe announcement came not long after the launch of new routes to the Americas. In December the carrier started flights to Houston and to Buenos Aires, following the arrival of three 787-9s that were delivered last year. Management has also announced plans to mount service in June to Ho Chi Minh City, which will be operated on a seasonal basis, flying three times a week with 767-300 aircraft \u2013 the same type used on the Osaka route.
\nSo what\u2019s gotten into the suddenly active ANZ? For the first half of fiscal year 2016, it reported a net profit of US$225 million, up 154 percent from the same period a year earlier. Lower fuel prices and a weaker currency accounted for a chunk of those gains, but they were mostly driven by a strong rise in operating revenue, according to the airline. Cargo revenue was US$126 million, an increase of 21 percent on the prior period. Excluding the impact of foreign exchange, cargo revenue increased 11 percent, driven by a 9 percent increase in volume and 1.6 percent increase in yield.
\nAt a time when yields are falling nearly everywhere, international routes to and from New Zealand have been exceptionally buoyant in terms of yield. For Hawaiian Airlines, for example, the strongest international sector in cargo last year was the route to Auckland. \u201cIt\u2019s been a dynamite market for us,\u201d said Tim Strauss, Hawaiian\u2019s vice president of cargo. The carrier targets traffic to and from the U.S. West Coast and Boston (with a truck link to JFK airport in New York). Hawaiian, however, eschews mail on the sector. \u201cWe get better per-unit yield at the container level,\u201d Strauss added.
\nThe main reason is that New Zealand has been a fairly balanced market, with a mix of hard goods and perishables going south and perishables dominating northbound loads. A tight supply of U.S. beef has ensured a steady flow of beef being flown in from the South Pacific, Strauss noted.
\nPeter Lamy, president of Los Angeles-based American Worldwide Agencies, notes that a lot of meat, especially lamb, is carried from New Zealand via the United States to Europe, chiefly the U.K. The routing reflects a key characteristic of New Zealand\u2019s cargo market: The lack of lift, which \u2013 combined with the long-stage sectors involved \u2013 makes for lengthy and sometimes complex routes, such as moving via Asian points like Tokyo or Singapore. From the U.S. West Coast, the closest alternatives to ANZ\u2019s direct Auckland service, in terms of transit times, are courtesy of Hawaiian Airlines and Air Tahiti Nui. \u201cGoing via Honolulu is a three-to-four-day service, Air Tahiti Nui is an extra 12 hours, and they only have a couple of flights a week,\u201d Lamy said.
\nBeing the only show in town with a direct route, ANZ has had no need to negotiate cargo rates for the past 10 years, according to Lamy. Since the airline stopped flying freighters between the U.S. and its home market, yields have held up well, notes Peter Burn, Air New Zealand\u2019s former head of cargo for the Americas and Europe.
\nBut this happy state of affairs is about to end, most observers believe. In June, American Airlines is going to launch daily service between Los Angeles and Auckland, using 787 aircraft. The following month will see the start of flights by United Airlines, linking San Francisco with New Zealand\u2019s business hub, also with 787 equipment. Initially the service will operate three times a week, but this will be stepped up to daily frequency in October, according to a spokesman for United Cargo. \u201cWe do have significant hopes for cargo on this route, though we\u2019re not targeting any specific segments yet,\u201d he said. \u201cWe expect machinery and electrical equipment to be notable commodities southbound and food products to be among the substantial product groups northbound.\u201d
\nThe entry of United and American will mark a sea change in the trade lane, Lamy predicted, pointing to the U.S. carriers\u2019 size, customer base and historically aggressive pricing tactics. While lift in this market is relatively tight at this stage, it will not take much to tip the balance into overcapacity, he added.
\nFor shippers looking for lower prices, things could get even better, if an unconfirmed rumor of plans at Qantas to mount freighter flights to Auckland were to become reality. \u201cThis surprises me,\u201d said ANZ\u2019s Burn, \u201cbut the low fuel prices would help.\u201d
\nIn any case, another niche that has so far offered higher yields is about to get hit with a serious infusion of capacity, notwithstanding the toll that the long stage sector takes on the possible payload on the new flights.
\nSource: aircargoworld<\/p>\n","protected":false},"excerpt":{"rendered":"