A new partnership with will help refocus its Hong Kong operations on connections to mainland China and other Asian destinations, following the New Zealand carrier’s decision to eliminate its Hong Kong-London flights.
Air New Zealand will code share with Cathay on all Auckland-Hong Kong flights from Jan. 31, and the two carriers have approval for a revenue-sharing joint venture on this route, Air New Zealand Deputy CEO Norm Thompson tells AviationWeek. Air New Zealand has one daily flight, while Cathay has up to two dailies.
The airlines will also strengthen interline links for flights beyond the two gateways, which for Air New Zealand is particularly important for service into China. The new deal gives Air New Zealand interline access to Cathay’s subsidiary Dragonair and its strong network from Hong Kong into mainland China.
The Cathay partnership will give customers another option for flying to Beijing, in addition to Air New Zealand’s connection withpartner in Shanghai, Thompson says. Shanghai is the only point Air New Zealand serves in mainland China, following its decision earlier this year to pull out of Beijing.
While Air New Zealand code-shares with Air China on some routes out of Shanghai, it only has interline authority from Chinese regulators on routes from Hong Kong to mainland China. Thompson says the carrier hopes to be able to code share on the Chinese flights from Hong Kong in the future.
The expansion of connecting options means the airline is unlikely to return to Beijing using its own aircraft, at least in the near future, Thompson says. However, he notes that the-9s that Air New Zealand has on order may make direct flights to Beijing economically viable.
Air New Zealand will axe its daily Hong Kong-London flights from March 4, although the airline will continue to fly to London daily via Los Angeles. Thompson says the Hong Kong flight accounted for about 47% of its capacity to London. The London flights via Hong Kong use-200ERs, while the Los Angeles flights use 777-300ERs.
Costs are higher and yields are lower on the Hong Kong-London route compared to Los Angeles-London, says Thompson. The carrier “could not see the light at the end of the tunnel” for the Hong Kong-London flight. He estimates that costs are about 10% higher on the route via Hong Kong, partly due to higher airport fees in Hong Kong than Los Angeles, and Russian overflight fees.
Thompson says Air New Zealand is becoming less reliant on London for feed from other European destinations, thanks to European interline traffic connecting to its flights in Los Angeles and San Francisco. This has been particularly noticeable as the carrier has boosted its flights into the U.S. West Coast gateways.
The Cathay deal and the Hong Kong-London cut are the latest steps in a wide-ranging overhaul of Air New Zealand’s international operation. The carrier had previously hinted that new airline partnerships would be announced this year as part of the international review. Thompson says the carrier is not currently working on any other partnerships aside from the Cathay deal, but is always on the lookout for opportunities.