nz aviation market outlook: …changes coming on the tasman · wlg-akl -1.5% ê 3,022,122 3,966,700...

Share your thoughts #CAPAEvents

NZ Aviation Market Outlook:…changes coming on the Tasman

Peter HarbisonExecutive Chairman, CAPA – Centre for Aviation


Oil prices are important drivers

Source: CAPA – Centre for Aviation & Oil Markets.

One year change (USD). Brent Crude Five year change (USD)

Jet fuel prices have risen almost 30% in the past 12 months (with the peak being over 40% in December)Brent Crude Price at USD71, 12-APR-18

Everyone was surprised when prices went to USD 100 per barrel


130

125

120

115

110

105

100

95

90

85

80

Passenger yield / Load Factor / Passenger growth

2011 2012 2013 2014 2015 2016 2017

140

120

100

80

60

40

20

Barre

l pric

e ($

)

10%

8%

6%

4%

Airline operating profit (EBIT)January 2011 = Index 100

$

$

Passenger growth

Profit

Load factor

Average ticket price

Oil barrel price

Source: IATA Air Transport.

Oil price/pax/fares index

2017 was a fairytale yearIt was not a normal year


WellingtonFull Service /

Regional Low Cost

AirlinesDOM 3 1INT 5 1

RoutesDOM 19 5INT 5~ 1

SeatsDOM 5,484,038 1,174,500INT 1,066,118 60,120

ASKsDOM 2,221,275,216 499,075,560INT 2,570,375,404 145,610,640

Scheduled Flights to Wellington

~ from 01-May-18 CBR-WLG will no longer operate

Source: CAPA - Centre for Aviation & OAG.


WellingtonFull Service Low Cost

Airlines 3 1Routes 19 5Seats 5,484,038 1,174,500ASKs 2,221m 499m

Scheduled Flights WLG, AKL, CHC


ChristchurchFull Service Low Cost

4 115 2

5,080,596 1,096,9202,726m 701m

AucklandFull Service Low Cost

4 119 8

8,629,785 2,451,3805,007m 1,593m


9 110 3

1,951,560 262,0806,789,188,824 606,261,600

30 248 4

13,268,021 714,77077,662,593,638 1,682,384,584

Airlines 5 1Routes 5~ 1Seats 1,066,118 60,120ASKs 2,570,375,404 145,610,640

Domestic

Internationa

l


Connectivity: two or more Transits needed to Int’l Destinations

Source: CAPA – Centre for Aviation & OAG.Source: CAPA – Centre for Aviation & OAG.

15.4%of WLG-origin international passengers had 2 or more

transits to reach their destination

direct 472,058 (44.0%)one stop 435,212 (40.6%)

two+ stops 164,911 (15.4%)

National average is only 2.9%

In 2017


Wellington Route capacity by seatsDomestic Growth 2018 2017WLG-AKL -1.5% ê 3,022,122 3,966,700WLG-CHC -2.0% ê 1,242,349 1,267,950WLG-NSN -1.8% ê 443,134 451,260WLG-DUD 0.0% è 402,384 402,187WLG-ZQN 67.0% é 261,734 156,702WLG-BHE 2.9% é 256,848 212,766WLG-NPE 2.2% é 161,524 155,888WLG-TRG 3.6% é 155,316 130,500

International Growth 2018 2017WLG-SYD -0.1% ê 451,944 452,508WLG-MEL 24.2% é 314,872 253,482WLG-BNE -1.9% ê 226,688 231,008WLG-CBR~ -66.8% ê 33,250 100,282WLG-OOL 8.2% é 60,120 55,554WLG-NAN 2.3% é 39,264 38,478


Source: CAPA - Centre for Aviation & OAG. Excludes VN & J2 which operated one flight.

Overall planned seat growth in 2018: 0.5%


State of air fares

from WLG from AKL from CHCAuckland $180.16 $186.30

Christchurch $164.22 $173.63

Queenstown $205.39 $166.40 $143.10

Napier $176.72 $129.90 $200.54

Dunedin $158.96 $197.60 $134.46

Rotorua $177.04 $106.50 $174.76

Wellington $173.73 $166.09

Source: Forward Keys, OFX & DistanceCalculator.net.

Average one way fare 2017 Average fare per KMfrom WLG from AKL from CHC

Auckland $0.37 $0.24Christchurch $0.54 $0.23Queenstown $0.32 $0.16 $0.40Napier $0.65 $0.38 $0.35Dunedin $0.26 $0.19 $0.43Rotorua $0.48 $0.56 $0.26Wellington $0.35 $0.54


State of air fares

Source: Skyscanner & DistanceCalculator.net. Date of travel 16-17 May. 1 Passenger – Economy (23-Mar-2018).

Return airfare – Cheapest* Average fare per kmfrom WLG from AKL from CHC

Auckland $63 $88

Christchurch $79 $99

Queenstown $109 $158 $115

Napier $115 $84 $135

Dunedin $119 $149 $115

Rotorua $166 $162 $163

Wellington $63 $76

from WLG from AKL from CHCAuckland $0.13 $0.12Christchurch $0.26 $0.13Queenstown $0.17 $0.15 $0.32Napier $0.43 $0.24 $0.24Dunedin $0.19 $0.14 $0.37Rotorua $0.45 $0.85 $0.24Wellington $0.13 $0.25

* Basic fare with no add-ons.


2017 Seats 2018 Seats

NZ 3,268,000 3,444,000

QF 2,163,000 2,546,000

VA 1,541,000 1,538,000JQ 1,030,000 983,000

EK 1,331,000 535,000OTHER 915,000 841,000

Trans-Tasman market share evolution2008-2018



2017 Seats 2018 Seats

NZ 13,497,000 13,598,000

JQ 2,900,000 2,913,000OTHER 318,000 271,000

Domestic market shares2008-2018



New Tasman services – Air NZ

“Air New Zealand and Virgin Australia will end their trans-Tasman alliance in October this year following seven years of partnership. Air New Zealand will no longer sell Virgin Australia’s trans-Tasman flights as part of its network, and Virgin Australia will no longer sell Air New Zealand’s trans-Tasman flights, for flights from 28 October 2018 and beyond.”Air NZ website


Trans-Tasman market dynamics

• Air New Zealand’s move to terminate the Joint Venture with Virgin Australia on the Tasman could have a profound impact on the market

• It will lead to:• Establishment of new routes• Intensified competition• Increased Virgin

Australia/Tigerair capacity• Potentially a price war


Trans-Tasman market sharesopens up new routes

Approx market shares• Qantas-Jetstar-

Emirates 40%• Air NZ 35%• Virgin 15%


-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Air NewZealand

QantasAirways

VirginAustralia

JetstarAirways

Emirates OtherAirlines

Frequency 2018 Seats 2018

Routes Frequency Seats

NZ 17 15,600 3,444,000

QF 11 12,900 2,546,000

VA 12 8,700 1,538,000

JQ 10 5,500 983,000

EK 3 1,100 535,000OTHER 7 2,600 841,000

Trans-Tasman Market Shares



Auckland-Sydney Frequencies

Air NZ dominates 3:1


Wellington-Sydney Frequencies

Virgin is not represented


Virgin Australia dominates WLG-BNE

Wellington-BrisbaneFrequencies


New Tasman services – Air NZ10-Apr-2018 8:17 AMAir New Zealand announces new trans-Tasman routes - 1

Air New Zealand will launch two new routes across the Tasman from December this year and add an extra 15% seat capacity across all its Tasman services year on year….From 18 December 2018, Air New Zealand will operate up to four times a week between Brisbane and the popular ski and tourist destination of Queenstown, increasing the airline’s total international capacity into the resort town by 20 percent.It will also operate up to five times a week between Brisbane and the capital city of Wellington, a 15 percent increase or 20,000 seats.


New Tasman services – Air NZ10-Apr-2018 8:17 AMAir New Zealand announces new trans-Tasman routes- 2

Auckland The airline will introduce additional services on both the Sydney-Auckland and Melbourne-Auckland routes, increasing seat capacity on each route by more than 45,000 seats. The airline will also boost capacity between Brisbane and Auckland by more than 15 percent through the introduction of additional morning services.ChristchurchThe airline will also move to double daily on peak days of the week from both Melbourne and Brisbane, and double daily Monday to Friday from Sydney. This represents a 15% increase in capacity or about 35,000 extra seats on Christchurch trans-Tasman routes alone.


A320neoRange 6,850 kmTypical seating 150

Narrowbody Long Haul – will transform access to smaller cities

Source: CAPA – Fleet Database & Airbus.

737MAX

Range 5,960 kmTypical seating 220

• The A321neoLR has a range of over 7,500km – with less than 200 seats

• At around the same unit seat cost as much larger aircraft


Narrowbody Long Haul – route potentials

A320neo (13)

JUL-

18

SEP-

19

FEB-

19

APR-

19

MAY

-19

JUN

-19

JUL-

19

AUG-

19

OCT

-19

DEC-

19

DEC-

20

WLG-DPS

WLG-PER

WLG-POM

WLG-ADL

WLG-DRW

WLG-CNS


Long haul narrowbodyopens up new routes

Qantas/Jetstar has 18 extra long range smaller aircraft on order


Long haul narrowbodyopens up new routes

With 18 of these long range narrowbodies, Qantas has many route options


Open skies:- the $$ value of a liberal aviation policy

China-Australiavs

China-Canada2008-2018

(seats each way)

0.497

2.332

0.445

1.651

0.0

0.5

1.0

1.5

2.0

2.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

One

Way

Sea

ts (M

illio

ns)

Australia Canada

10.5%Difference in 2008

29.2%Difference

in 2018

Australia introduces open skies


Open skies:- the $$ value of a liberal aviation policy

China-Australiavs

China-Canada

Australia has open skies:

• 10 Chinese airlines• 1.2 million tourists• = $5 billion expenditure

Canada has bilateral limits on Chinese airline access:

• 3 Chinese airlines• 600,000 tourists

• = $2.5 billion expenditure

Net loss to the Canadian economy due to the bilateral

restrictions:

• $2.5 billion per annum

nz aviation market outlook: …changes coming on the tasman · wlg-akl -1.5% ê 3,022,122 3,966,700...

Documents