Aviation

Air New Zealand unveils new performance initiatives, launches direct service to Seoul

Kiwi airline Air New Zealand has announced a series of initiatives to improve its financial performance and customer experience over the next two years, following a business review.

Among Air Zealand’s new initiatives is the launch of new direct services between Auckland and Seoul in South Korea.

The airline will fly three times per week to Seoul’s Incheon International Airport from 23 November 2019, and up to five times a week during the peak holiday period from late December to mid-February.

The new service will be operated by Boeing 787-9 Dreamliner aircraft, with a flight time of around 12 hours northbound and just over 11 hours southbound.

Air New Zealand first operated services between Auckland and Seoul in the mid-1990s, but suspended the service when travel patterns changed and there was stronger demand elsewhere on its network.

Furthermore, the airline will increase the frequency of its newly launched Taipei and Chicago routes means to up to five times a week at peak times. Air New Zealand currently operates three services per week on each route.

As the airline plans for network growth of three to five per cent on average over the next three years – revised from five to seven per cent growth –  it will amend the timing of its Auckland-Hong Kong service to free up one aircraft from October 2019.

Air New Zealand also announced that approximately NZD$750 million ($720 million) in aircraft capital expenditures will be deferred to ensure capacity growth better reflects the slower demand growth environment.

In addition to ongoing cost saving initiatives of more than NZD$50 million ($48 million) per annum, the airline will embark on a two-year cost reduction program.

The program is designed to deliver more than NZD$60 million ($57.6 million) in additional savings on an annualised basis.

Air New Zealand also has a number of enhancements to the customer travel experience planned over the next two years.

Among them is a progressive introduction of an enhanced Business Premier experience on its long-haul fleet from the end of 2019; and a new, more spacious Economy product offering on its long-haul fleet from mid-2020.

Air New Zealand also plans to upgrade nine lounges across the network for approximately NZD$50 million ($48 million), and free WiFi is being offered on all of the airline’s enabled international planes from today.

Air New Zealand CEO Christopher Luxon said the new initiatives will positively impact revenue growth, capital efficiency, operating costs and the customer travel experience into 2020 and beyond.

“The actions we are announcing today are focused on realigning our business to ensure a return to earnings growth in the lower-growth environment,” he said.

“Air New Zealand is experienced at adapting to changing macro environments, and the actions outlined in the business review today will ensure the business is more dynamic, increasingly competitive and financially resilient for the future.

“Our confidence in Air New Zealand’s long-term strategy, customer proposition and financial performance remains strong. The steps we are taking today will provide a strong foundation for future earnings growth.”

The new initiatives follow a dour half-year result for Air New Zealand, with the airline’s profit growth plummeting 34 per cent.

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