Air NZ announces international route changes

Media Release 12 July 2006

Air New Zealand announces international route changes

Air New Zealand today announced significant changes to its international network.

The Airline is suspending operations to Singapore, introducing the Boeing 777-200ER on flights via Los Angeles to London and will not recommence twice weekly summer season flights from Christchurch to Los Angeles.

"The moves we are announcing today are the beginning of a carefully thought out repositioning process to continue profitably growing Air New Zealand," said Rob Fyfe, Chief Executive Officer.

"I am committed to seeing Air New Zealand grow," said Mr Fyfe.

"Air New Zealand will continue to increase its total long haul seat capacity by 9 percent in the 2007 financial year and by 6 percent in total for the Air New Zealand group," he said.

The Singapore route suspension, which takes effect on 2 October, presents Air New Zealand with aircraft and resources to pursue new opportunities, and the Airline is well advanced in planning for the possibility of new international routes.

"North Asian routes represent substantially greater growth prospects than South East Asia which is already well served with international airline capacity," said Mr Fyfe.

"We have the debut of our non-stop 777 service to Shanghai three times a week from 6 November and early bookings are looking strong."

"The Airline is also preparing for the beginning of a second daily service to London via Hong Kong in October this year which shows strong customer demand. In addition the cargo market drives Air New Zealand's preference for building North Asia capacity."

Air New Zealand currently flies daily from Auckland to Singapore using its Boeing 777-200ER aircraft. Nonetheless, Air New Zealand currently has less than a 30 percent capacity share in this market.

The Airline has sustained significant losses flying to Singapore in recent years.

"The vast majority of passengers travelling from Auckland to Singapore are connecting with another service, primarily to the northern hemisphere" said Ed Sims, Air New Zealand's Group General Manager of the International Airline. "Most of these destinations are served just as effectively via Hong Kong."

"There are around 1200 seats each way in total a day available on all carriers between New Zealand and Singapore. Less than 5 percent of customers flying this route are travelling to and from Singapore. The majority are flying onwards to other destinations," said Mr Sims.

Customers affected by the suspension will be re-accommodated through arrangements with Star Alliance partners, rebooked on alternative Air New Zealand services or with other airlines.

Air New Zealand is continuing discussions with Star Alliance partners to enable an Air New Zealand code share on their flights to Singapore going forward.

The Airline's 22 staff in Singapore will be affected by the decision and employment opportunities for them are currently being investigated.

Pilots, cabin crew and the 777 aircraft will be redeployed elsewhere on the international network.

The route review will also see Air New Zealand's Boeing 777 aircraft deployed on flights NZ1 from Heathrow to Auckland and NZ2 from Auckland to Heathrow, both via Los Angeles effective 29 and 28 October respectively.

These services are currently operated exclusively by the Boeing 747-400.

"Buying the new 777 has given us the flexibility to right size aircraft to the varying demand in our markets. With current fuel prices and our focus on optimising fuel usage, it also makes sense to operate the more efficient 777 on these routes," said Mr Sims.

Boeing 747 capacity will be put back on to the Auckland - Los Angeles - London route during the December to January high season.

In addition, in the current fuel price environment and with soft demand, Air New Zealand will not be recommencing flying Christchurch to Los Angeles from 29 October, a service which was originally planned with two weekly 777 flights for the summer season.

Mr Fyfe also signalled the Airline was closely examining the frequency of its operations to Tahiti.

"Today's announcement is yet another important step in progressing Air New Zealand's clearly defined strategic plan to build a stronger, more nimble airline around a portfolio of profitable routes to desirable destinations," Mr Fyfe said.

ENDS.

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