03 April 2020

Crystal Ball Gazing for 2020 Revisited

What a year! 

I don't think anyone was expecting 2020 would unfold as it has...

I hope you are safe and well in your bubble

Someone wrote comment on the blog suggesting I write a comment on the future of Air NZ. 

I've decided to revisit by crystal ball gazing from New Years Day... 

So, this is what I think now, remembering  I am just an armchair airline enthusiast...

Air New Zealand has made it clear that in the short term it will tend to be a domestic operator. International services will be very slow to build up as and when covid is controlled in destination countries. On the domestic scene, after the Christchurch earthquakes Air New Zealand slowly built up the services to Christchurch as the demand grew. It will be their task to build up domestic services again but with job losses and a much softer economy it won't be easy. It will never be a better time for kiwis to visit Queenstown so hopefully domestic tourism and family visiting family after lockdown might help kick start Air NZ's domestic services as business traffic builds up. As part of the Government's package they are not to drop any domestic ports. So a long haul for Air New Zealand to get back to where they were so a much smaller airline.

Jetstar have already indicated a restart on 1 June 2020, some weeks after the lockdown ends. Clearly they don't want to be flying in the building up of traffic phase which indicates something of the nature of Jetstar in the New Zealand market. Look for a leaner Jetstar.

I suspect Air Chathams doesn't owe a lot on its fleet which will help keep it in a reasonable position. The frequency of the Chathams' service will depend on the capacity to export fish beyond NZ. The Whakatāne, Whanganui and Kāpiti routes will rebuild slower. Air Chathams' capacity to use smaller aircraft, eg a Metro instead of a Saab, is an advantage. If we become covid free and Norfolk Island remain covid free I imagine the Norfolk Island service will be able to start early and Norfolk Island will be an attractive covid-free destination. Can't see much work for the ATR. This might be the time to pick up further Saabs and ATRs at a lower cost.

Barrier Air was expecting to carry 70,000 passengers this year. It could still happen. Domestic tourism is going to take off in the short term when there is little international travel and certainly Great Barrier Island has a lot to offer. Marketing Great Barrier Island and Kaitaia as winter destinations would be key. Barrier Air has proved itself as a quality operator.

I suspect Sounds Air will ramp up to normality reasonably quickly, especially if Air New Zealand slowly ramps up its frequency. That would enable a healthy return to services to Blenheim and Nelson.

If Air Napier can maintain its freight service to Gisborne it will be business as usual. I doubt whether there would be any further expansion

Fly My Sky has a new owner but what an awful time for the new owner to take over... however, we were coming into winter when there was lesser demand.  As stated above for Barrier Air domestic tourism is going may take off in the short term and Great Barrier Island has a lot to offer. Services to Matamata, which have never really taken off, won't be a feature until we overseas tourist traffic. 

Sunair run on demand. They will build up again as they do. Their Great Barrier services will be the mainstay of their recovery. The new schedule was already reducing flights on the Gisborne and Whangarei services to Hamilton and Tauranga. 

Golden Bay Air has a nice market in the Golden Bay. It is also has a certain level of domestic tourist traffic. I think it should bounce back nicely. 

Stewart Island Flights carries a lot of international tourists. Services operate on demand and will build slowly initially driven by Stewart Island local traffic and domestic tourism. 

Another bounce back for Originair. Don't look for flights to New Plymouth in a hurry.

Air Auckland operates largely as an air taxi and I wonder how much traffic it gets. Time will tell.

Click on comments to read what others think or make your own comment


  1. Boy you are certainly optimistic on this occasion Steve! I am not so sure about Chathams and Sounds. Sounds has a lot of debt and Air NZ are going to be super aggressive. Chathams has a a lot of debt on those ATRs and ridiculous overheads. Time will tell I suppose!

  2. I've no knowledge about the debts the airlines carry... I wonder if Air NZ will be able to afford to be super aggressive... I think they will go for less frequency full flights and build up gradually. Air Chathams has one ATR - I think they picked the Saabs up relatively cheaply. I think Air NZ will be the one who struggles the most due to the international fleet grounding.

  3. I can't see domestic Air NZ struggling as such, no doubt they'll emerge as a much smaller operation, but the new Air NZ will be sized exactly right for the market with the ability to instantly expand where possible. They may be conscious of the smaller guys, but it's doubtful they will work around the likes of chathams and sounds air. Why wouldn't Air NZ deploy their idle assets on routes like Westport and Wanganui again if the customers are there? Chats have chipped away and grown for many years to achieve what they have, while it's maybe fair to say sounds were doing what they do best when they had some opportunities fall in their lap in 2015 and were only able to take advantage of it with support from external sources and taking on massive debt. Chats probably have debt on the ATR only? Is one ATR more expensive than six pc12's? Unlikely

    Originair have no debt and a committed backer. Not sure about fly my sky. Golden Bay and Air Auckland have invested in new aircraft, big debt for the turnover? Maybe they have backers with money? The others have their niches and seem to do ok from them

    Interesting time!

  4. COVID-19 virus will be around for along despite any vaccines due to its long incubation period (2-14 days) and the ability to survive in healthy human hosts without showing systems, so we will see countries having tighter boarders due to possible 2nd and 3rd waves disrupting global commerce leaving the world in a long recession resulting in less money of luxury products like travel and tourism.

    So where does this leave commercial passenger aviation in NZ - not in a good position. So who will be operating in the next 12 months. My guess is -

    - Air NZ

    As Greg Foran said, he believes that Air NZ will be predominately as domestic airline with a small amount of international routes.

    I do see short haul international services re-established to Australia and the South Pacific island nations for passenger and freight. With regards to long haul routes - Los Angeles, Singapore and Shanghai and possibility Vancouver and Tokyo with emphasis on more freight and less passengers. Air NZ will use is preferred alliance partners - Singapore and United using their metal with NZ flight numbers for other international destinations.

    So what will be the 'new' Air NZ fleet will look like. I see the Q300 fleet being phased out early and the ATR72s on regional routes. The older company owned A320ceos will stored for indefinite period. Those older A320ceo on lease, depending the time left on the leases will be return to the lessors and the newer A320ceos will be used for domestic and short haul international jet services along side the 4 A320neos and 7

    The B777-200er fleet the one on dry lease from EVA will be returned and there are 2 who leases will expire in the next 2 years will returned to the leasing companies where Air NZ pays the remaining balance of their leases. Out of the remaining 5, the company owned ones will be stored and the those still on lease will have their seats taken out and become freighters only until there are with drawn in the next 2-3 years.

    The B777-300er fleet, the one that is on dry lease from EVA will be returned. The company owned ones will be stored in NZ and the leased ones will be uses for freight and will retain their seats for passenger services if required.

    The B787-9 fleet will be come the main stay of the Air NZ's medium to ultra long fleet for freight only and freight/passenger operations. The deliveries of the B787-10 will delayed for another 2 years.

    - Air Chathams

    I think the government will under write freight and passenger between Auckland/Wellington and the Chatham Islands.

    I am not sure if the government will subsidise flights between Auckland and Whakatane, Auckland and Whanganui and Auckland and Kapiti Coast. It will depend if the government will see these as 'essential' services.

    - JetStar

    This will be interesting to what will happen here. It will be down to what frequencies Qantas re-introduced over the Tasman. Qantas already has co-share arrangements with Air NZ on most regional routes so the re-start of Jetstar could be delayed due to lack of passenger demand across the Tasman and domestically in NZ especially of the forecast that NZ unemployment will be high.

    - Barrier Air, Golden Bay Air

    After the lock down, domestic passenger traffic will slowly build but it will be lean. They both have a captured markets.

    - Soundsair, Sunair

    After the lock down, passenger traffic will slowly build but it will be lean.

    - Stewart Island flights

    After the lock down, domestic passenger traffic will slowly build but it will be lean. Overall it safe market for them as they have the right aircraft type and a captured market on both sides of the strait

    I am not sure flymysky and Originair. It will depend if the government see regional air services that are not operated by Air NZ as essential excluding Chatham Islands.

  5. I expect that the current lock-down period will end fairly quickly, possibly after a short extension past the current four-week period. At that time we will gradually be able to return to workplaces and then travel within New Zealand.

    However, I expect passenger travel from and to New Zealand to be heavily restricted for a much longer period, and probably not being available until an effective and proven anti-virus inoculation can be discovered and made widely available. This could be a matter of years not months, and even then low-cost mass tourism may never return.

    As a result many sectors of business will be affected, some totally destroyed. Anything remotely to do with tourism will suffer badly. Unemployment levels will rise, and those who still retain jobs will be nervous and tend to restrain their discretionary spending.

    As well as hospitality and accommodation businesses, the aviation sector will be among those who suffer most.

    We have a number of flying training organisations who's business model is training people to become airline pilots. With closure of some airlines and the heavy retrenchment of the others I cannot see any demand for new recruits and expect these institutions to close down. Bad time to be a Whanganui ratepayer.

    Aero clubs rely largely on members spending their discretionary income on flying, and given the economic uncertainty will struggle.

    A much-reduced in size Air New Zealand will most likely just concentrate on the internal main-trunk routes, so third-level operators could find niche markets in servicing smaller towns. However, with the lack of tourists visiting the country, they may have difficulty in attaining profitable passenger loading levels.

    I would expect our farming sector to flourish as we can still export produce, and in an uncertain and nervous world we are generally seen as a high-quality and safe source of food. Thus agricultural aviation should do well.