Air New Zealand Sees Huge Recovery In Domestic Business Travel

Air New Zealand released its February 2021 traffic and operating statistics on Tuesday. They paint a mixed picture. While passenger numbers across the entire Air New Zealand network were still down by more than half compared to February 2020, there were some rays of sunshine. Among them was a rebound in domestic business travel to 90% of pre-downturn levels.

Domestic business and corporate traffic on Air New Zealand have rebounded strongly. Photo: Getty Images

“Our initial hopes were a return to 70% next year,” says Air New Zealand’s Leanne Geraghty. “To recover to near-normal levels this quickly really reinforces the strength of our domestic network and the desire of Kiwis to reconnect in person.”

The kiwi airline points out business traffic on airlines in the United States is only running at about 15% of pre-downturn levels. Air New Zealand also says it has one of the strongest domestic travel markets in the world. That’s probably true. What’s also true is that New Zealand is a small domestic travel market.

In February, Air New Zealand carried 608,000 domestic passengers, down 32.% on February 2020’s numbers. Across Air New Zealand’s current financial year to date, the airline has flown 5,042,000 passengers domestically. That’s 32.5% down on the 7,466,000 domestic passengers carried at this point in the previous financial year.

Nonetheless, the return of the premium fare-paying business and corporate markets has put a spring in Air New Zealand’s step. Leanne Geraghty says she is “blown away” by the rebound.

The rebound in domestic business travel has surprised Air New Zealand Photo: Airbus

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Air New Zealand’s international services continue to struggle

Elsewhere across the Air New Zealand network, the performance is not so good. There’s not a lot of change between January’s performance statistics and this latest release of numbers. Overall, Air New Zealand flew 624,000 passengers in February 2021, including international operations, down 54.2% on the previous February.

Air New Zealand’s international passengers comprised just 2.6% of total passenger numbers in February 2021. In an investor’s briefing last month, Air New Zealand CEO Greg Foran acknowledged this, calling the airline’s international operations “a shadow of what they used to be.”

There is no roadmap for how international (flying) recovers,” he said.

Air New Zealand’s CEO says there is no roadmap for the recovery of international flying. Photo: Airbus

Travel bubble under threat

Hitting Air New Zealand’s international operations hard is a 95.7% decline in trans-Tasman passenger numbers in February – another month in a long-running series of months where traffic on Air New Zealand’s most important international market was almost at a standstill. There is hope people will start flying across the Tasman again if New Zealand finally green lights a travel bubble with Australia. But there’s now an outbreak of COVID-19 in southeast Queensland, and New Zealand will be in no hurry to import that.

If the long-awaited travel bubble is delayed beyond its anticipated late-April start date, Air New Zealand’s international passenger numbers will continue to stagnate, dragging down the airline’s overall performance regardless of how well the domestic market goes.

Another bright spot for Air New Zealand is the strong performance of its freight operations. In the last half of 2020, freight revenue had increased 91% to US$260.7 million. A couple of months down the track, the airline’s freight business continues to tick over nicely.  Helped along by subsidies from the New Zealand Government, Air New Zealand is managing to keep its fleet of Boeing 787-9s busy mostly ferrying freight around the Pacific rim. The two markets could not be more different – freight and Air New Zealand’s premium domestic business and corporate market. But right now, they are the airline’s best-performing markets.