Air NZ may suffer as more shun Heathrow

A report in NZ’s The Dominion Post says that Air New Zealand services to London Heathrow could come under pressure as passengers shun the increasingly chaotic airport.

The International Air Transport Association has said Heathrow traffic is down 1.7 per cent at a time when the global aviation market is growing at 6.3 per cent a year.   “The unfortunate reality is that passengers are avoiding the mess at Heathrow,” IATA director-general Giovanni Bisignani said.

A lack of investment by BAA, the British airports authority, had resulted in “embarrassingly low service levels on everything from security wait times to baggage delivery and almost everything in between”, Mr Bisignani said.

Bags can take an hour to arrive on pickup carousels because of equipment shortages, and Britain’s unique security checks cause long queues and delays.

Heathrow is the only European gateway for Air New Zealand, which flies there twice daily via Hong Kong or Los Angeles.

House of Travel retail director Brent Thomas said travellers who had a continental European leg to their holiday were increasingly opting to fly direct to cities such as Rome or Paris on rival airlines, then take a train to Britain, rather than incurring the higher cost and inconvenience of Heathrow.

Air New Zealand was also likely to miss out on picking up those passengers for their journey home from London because return fares were typically booked on one airline.

Mr Thomas said the main reason people shunned Heathrow was to avoid paying higher taxes, which, at $146 on a return ticket, were about three times higher than at Frankfurt, or six times more than at Rome.

IATA has accused Heathrow of “pocketing a 42 per cent margin at the expense of the 68 million beleaguered passengers using its poor facilities each year”.

But Air New Zealand said it was not experiencing “a significant shift in passenger behaviour” to avoid Heathrow.  “Heathrow is the destination for most of our passengers and the UK market is four times larger than any other European market,” spokeswoman Tracey Palmer said.

Air New Zealand’s United States and London flights were 84.4 per cent full in June, up 8.4 per cent on a year earlier.  But Air New Zealand faces stiff competition from some of the world’s biggest airlines that fly from Auckland and Christchurch to almost anywhere in Europe.

Singapore Airlines flies one-stop to 10 points in continental Europe and Hong Kong’s Cathay Pacific to three points, both in addition to British services.

Dubai airline Emirates has said Newcastle would become its sixth British gateway next month, adding to 16 destinations in continental Europe via Australia and Dubai.   Early bookings from Newcastle showed New Zealand was the seventh most popular end destination for those passengers. Mr Thomas said Emirates was not having a big impact on Air New Zealand’s British market, but was opening other British and European arrival options.

Air New Zealand does have codeshare agreements with Star Alliance partner Lufthansa on direct services to Frankfurt and Munich from Hong Kong, Los Angeles and Shanghai.  But with its long-haul fleet fully utilised when the new service to Vancouver starts in November, it has little scope to add to its own British or European network till new Boeings begin arriving from 2010.

Report by The Mole