Air New Zealand relying on Aussies for new routes

Air New Zealand will be looking to Australians to help fill planes on new routes. Photo / 123RF

Air New Zealand will be looking to Australians to help fill planes on new routes into North America.

The airline launches its non-stop Chicago service in November and is eyeing others, partly to meet demand from passengers across the Tasman.

Chief executive Christopher Luxon told shareholders that Australians made up between 20 per cent and 40 per cent of passengers to existing destination Houston and from the end of November, Chicago.

The first booking for that service came from a customer in Sydney, he said.

The airline's research found 34 million people in the United States were actively considering a holiday in New Zealand, along with other potential destinations.

However, last year only 340,000 visitors came from the US.

"Part of that disconnect is related to the perception that New Zealand is a 40-hour flight away," said Luxon.

"Our entry into markets in the Midwest such as Houston and now Chicago will go a long way to overcoming that hesitation and help convert the huge number of active considers into actual visitors."

The high proportion of Australians on Air New Zealand planes had put strain on the relationship with Virgin Australia, which also flies to Los Angeles.

The partnership will end from October 28 after an acrimonious bust up, with each airline saying they had been let down by the other's onboard experience.

Luxon said his airline had built up its brand and sales presence in Australia and the airline had about 35 per cent of the transtasman market.

The Tasman and the Pacific Islands network was targeted to grow between 7 per cent to to 9 per cent this year.

Capacity growth in this region would be supported by new A321 NEO's which had about 25 per cent more seats than the current A320s flying those routes.

The first of these planes will be introduced in November.

Luxon was also asked about negative coverage of the airline in relation to the withdrawal from the the Kapiti Coast earlier this year.

He said Air New Zealand could have communicated the rationale for quitting the service better, adding that the aircraft freed up from that route were better used on other regional routes.

Jet fuel prices have risen above the assumed average for the current financial year of US$85 a barrel in recent weeks, said the airline's chairman, Tony Carter.

However the airline made no change to the $425 million to $525m in underlying earnings before tax it is forecasting for the current financial year.

That estimate, made last month, excludes an estimated hit to earnings of between $30m and $40m from schedule changes forced on the airline by maintenance issues relating to the Rolls Royce engines used on Boeing 787-Dreamliner aircraft.

Carter said declines in the value of the New Zealand dollar were only "slightly negative" on balance for Air New Zealand because of its impact on the cost of fuel and other imports.

The lower kiwi dollar did make the country more competitive as a tourism destination, he said.