Airline numbers soar but aviation boom shows signs of levelling off, says Auckland Airport

Cities such as San Francisco have been a growing source of tourists and more popular as a destination for Kiwis.

Auckland Airport believes there is room for a third more growth in the buoyant North American market but its boss says there are signs the aviation boom is levelling off.

Chief executive Adrian Littlewood said there had been 11 new carriers operating to Auckland in the last 18 months taking the number of airlines to 28.

"While it has been an extraordinary period it's unlikely we're going to see that kind of growth continue,'' he said following Auckland Airport's international travel summit.

"From an industry point of view the focus will be about making that significant growth stick - how we make those routes sustainable and durable in the long term and that's about thinking about the yield on those flights."

Scott Tasker, the airport's general manager aeronautical commercial, said
there was high unmet demand for travel to New Zealand from the United States and Canada. This is despite the 25 per cent growth in North American visitors since July 2016; the arrival of United Airlines and American Airlines; and the introduction of Air NZ's direct route to Houston.

Speaking at the summit, Tasker said the growth was a result of increased competition, greater airline capacity, lower airfares and better connectivity.

Special return fares continue to dip below $800 for direct flights between New Zealand and the US.

Last year Air New Zealand boosted services to the US mainland and United Airlines and American Airlines started direct flights between the two countries.

Data collected during New Zealand's summer season shows that the demand for travel between North America and New Zealand is running at high levels. US visitor numbers to New Zealand have grown by 26 per cent or 55,280 arrivals from July 2016 to March, and outward travel to the US by New Zealanders has risen by 21 per cent or 26,200 departures.

Auckland Airport's modelling, however, shows that the US and Canada continue to be underserved markets with around 33 per cent unmet demand.

While a considerable amount of growth has been achieved in the past nine months this level of unmet demand indicated that, in time, further increases in airline capacity would boost travel.

"We could see the potential for significantly greater numbers of high-value visitors out of North America at the start of 2016 and that has been achieved through the addition of new routes and new carriers,'' Tasker said.

While United Airlines has pulled services out over winter and American Airlines will have a pause in early spring, both are due to resume with more flights next summer.

"Not only have we had very pleasing visitor growth out of North America but New Zealanders have also been given greater choice with more accessible airfares and many more options for direct connections to other destinations within North America and beyond.

While not surprising given the increase in seat capacity, the fact that the country experienced an immediate 37 per cent jump in visitors in what is traditionally New Zealand's low season, July and August last year was ''remarkable", he said.

Tasker said that before the start of these new services from the United States in July 2016, travel between the two countries was inhibited by comparatively high air fares and the limited range of destinations.

Air New Zealand began to expand travel options by launching its Auckland to Houston service in December 2015 with five times weekly frequency, which becomes daily in peak season throughout December to February.

The airport modelling showed clear demand for travel on airline networks that reached deeper into the US, beyond the traditional West Coast gateways of Los Angeles, San Francisco. To achieve the full potential of the North America visitor markets, new routes from additional carriers would be required between New Zealand and North America.

The annual increase in spending from the additional visitors that the two US airlines brought is an estimated $380 million.

Outbound travellers from New Zealand also showed significant growth, up 14 per cent during the three months from July-September 2016 over the previous year, with many taking advantage of the increased access and improved connectivity to destinations across North America.

The success of the North American routes could also be attributed to the US-based airlines leveraging their millions of loyal frequent fliers, to generate high-value business for the New Zealand tourism sector.

Tourism New Zealand has been active in working with the two US-based airlines to carry out joint marketing campaigns in North America, adding to the range of travellers attracted to the region.
 
Notably, onward travel beyond the main West Coast gateways further into the US and Canada doubled in this period and has remained high ever since.

Tasker also told the summit that other markets were significantly underserved. It is estimated that Germany could do with 42 per cent more flights, Britain 37 per cent and South Korea, 48 per cent.

There was a pipeline of new opportunities but the explosive growth of the past two years was likely to level off.