Air New Zealand doubles down on Houston route

Air New Zealand is ramping up its new Auckland-Houston route faster than anticipated as it benefits from high demand from cashed-up tourists from the US east coast and oil executives travelling to and from Australia.

As a result, the airline has reduced the number of flights on the Auckland-Los Angeles and Auckland-San Francisco routes, which will become increasingly competitive due to the entry of American Airlines and United Airlines into the New Zealand market from June and July respectively.

Macquarie Equities said scheduling data showed an 11 per cent decline in Air NZ’s capacity to Los Angeles and a 8.8 per cent decline to San Francisco in the current half relative to a year ago, with a 17 per cent fall to Los Angeles expected in the second half of the calendar year. Air NZ will not be running a third daily Los Angeles flight during the peak June/July travel season this year.

Air NZ had initially planned to fly to Houston up to five times a week when the route was announced, but it now plans to have five weekly flights on a permanent basis from March.

During a sale in the Australian market this month, Air NZ did not offer any premium economy or business seats to Houston at special prices as it had for Los Angeles and San Francisco. An aviation industry source attributed that to strong demand at the front of the plane from American tourists from places such as New York as well as oil industry executives. The source added the carrier’s new Auckland-Buenos Aires route was also outperforming expectations.

Air NZ has had a monopoly on flights between New Zealand and the mainland US since Qantas abandoned the Auckland-Los Angeles route in May 2012. That allowed Air NZ to often charge higher fares in economy class from Auckland to the US than carriers charge on the longer flights from Australia to the US.

Qantas offers non-stop flights from Sydney to Dallas, a hub of partner American Airlines, while the Air NZ Auckland-Houston flights are to a hub of its partner, United. Houston is the only top-10 international destination for Australian business travellers not served by Qantas. Air NZ has ensured its flights are timed for easy one-stop connections to Perth, versus the two stops needed from Perth to Houston on Qantas.

The trans-Pacific market is not the only one on which Air NZ is facing more competition this year. China Eastern launched Auckland-Shanghai flights in September and Jetstar has begun regional turboprop services in the New Zealand domestic market…

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