Lobsters lead way for Air New Zealand

PUBLISHED : Wednesday, 20 November, 2013, 11:33am
UPDATED : Thursday, 21 November, 2013, 1:59am

Rock lobsters have been frequent flyers in the past two years on Air New Zealand’s service from Auckland to Shanghai, the only destination it serves in mainland China.

Since the start of last year, the airline has delivered more than 2,000 tonnes of live lobsters to Shanghai after a free-trade agreement between the two countries led to the scrapping of all tariffs on lobster exports from New Zealand to China.

To cater to growing demand for the fresh catch, Air New Zealand deployed Boeing 777-300s – ample-bellied, cargo-friendly aircraft – alongside Boeing 767s on the Auckland-Shanghai route.

The airline, which has been flying to the mainland for seven years, has adopted a more cautious approach to expansion there than other international carriers.

It scrapped its service to Beijing last year, and its development plans could be seen as conservative, given that the number of mainlanders visiting the island nation has grown 25 per cent this year.

“We’re learning to build the market in China, which is very similar to my previous job at Unilever,” Air New Zealand chief executive Christopher Luxon said.

“It is more important to get the model right in Shanghai before copying it to other mainland cities.”

Luxon, a New Zealander, joined the airline this year after 20 years at the Dutch consumer goods firm, where he ended up as chief executive of its Canadian operations.

After pulling its twice-weekly direct flights to Beijing in March last year, Air New Zealand has focused on Shanghai’s passenger and cargo markets, because the city is the most important mainland gateway for air cargo. It has no immediate plans to resume flights to Beijing.

It is more important to get the model right in Shanghai before copying it to other mainland cities
Christopher Luxon, Air New Zealand

The airline is struggling to secure a dominant role in traffic between the two countries, despite its status as the national carrier.

Out of the 230,000 mainland visitors and 28,000 Hong Kong visitors to New Zealand each year, it carries only about 30 per cent, with the rest choosing to fly with Cathay Pacific Airways, Australian carriers and newcomer China Southern Airlines.

More than half of the mainland tourists visit both Australia and New Zealand, flying to Australia first, which partly explains Air New Zealand’s low market share.

Promoting New Zealand as a standalone destination for mainland visitors was the top priority for Air New Zealand the airline’s top priority, Luxon said.

Operating under the principle “if you can’t beat them, join them”, Air New Zealand teamed up with Cathay Pacific in a profit-sharing programme for flights between Hong Kong and Auckland in January.

It is ground-breaking co-operation between two carriers belonging to different airline alliances.

“It is not about taking market share from each other but growing the whole market,” Luxon said.

Of the 83 million tourists leaving China each year, just 1.2 per cent go to New Zealand.

Luxon said the partnership with Cathay was an outstanding success for both airlines, but it was difficult to extend their co-operation to mainland destinations through code sharing, because it would not be allowed by the mainland regulator.

The Star Alliance, which Air New Zealand belongs to, would also forbid it, he said.