Air New Zealand is considering expanding its routes to India, a strategic move that could boost its market presence in the region. However, CEO Greg Foran has emphasized that any new routes will only be explored once the airline overcomes the current economic and operational challenges it faces.
The airline posted an underlying profit of $222 million for the year ending in June, a significant drop from the previous year. Net profit fell by 65%, totaling $146 million, down from $412 million the previous year. Foran attributed this decline to several “headwinds,” including a subdued New Zealand economy, engine supply issues, and increased competition in the American market.
One of the primary challenges Air New Zealand faces is reduced government spending on domestic travel, down by 28%, which represents a substantial portion of its domestic business. Additionally, the airline is grappling with engine supply issues affecting its Dreamliner and Airbus fleets, delaying its capacity to expand.
Despite these challenges, Foran highlighted the airline’s strong performance on routes to major American hubs like Dallas, San Francisco, and Los Angeles, where passenger traffic has increased. However, the airline’s ability to form partnerships with other U.S. carriers is limited by its membership in the Star Alliance, which precludes deals with Delta and American Airlines.
Looking ahead, Foran expressed a strong interest in exploring new routes to India, given the significant traffic Air New Zealand currently carries to Singapore, where passengers then transfer to other airlines heading to various Indian cities. The airline is also considering a return to European routes, contingent on resolving the engine supply issues and the delivery of new aircraft expected by the end of 2025.
Foran acknowledged the cyclical nature of the airline industry, with periods of both tailwinds and headwinds, and maintained confidence in the American market despite current challenges. He also addressed concerns over high airfares, attributing them to the basic economics of supply and demand.
Air New Zealand recently paused its 2030 climate targets, citing resource constraints, but Foran assured that the airline remains committed to reassessing and achieving its sustainability goals, albeit with a more pragmatic approach.
