Border block: Air New Zealand needs it like a hole in the head

An Air New Zealand 777-200 touches down at Auckland International Airport. Photo / Dean Purcell

COMMENT:

If anyone thought running an airline was going to get easier with practice during a pandemic then the Government's move to stall the flow of Kiwis coming home shows that it hasn't.

With the increasing number of New Zealanders heading back - three months after they were first advised to do so - there was no option but to put a pause on new bookings for three weeks to ease pressure on isolation and quarantine facilities.

Housing minister Megan Woods is dead right when she says that in a pandemic it's not business as usual now - and it won't be for some time.

For Air New Zealand, today's announcement is yet another knock but the airline had no choice but to do its bit as the national carrier, 52 per cent owned by the Government which is also offering a $900 million loan to help get it through the crisis.

While small consolation, the lost bookings are off an extremely low base.

It is carrying about 80 per cent of inbound international passengers which amounts to about 2500-2800 every seven days for the past few weeks, a fraction of the 50,000 it was flying into this country this time last year.

And assuming the border crunch is eased there will be the opportunity to capitalise on pent up demand when inbound bookings are turned on again.

But it's creating another logistical problem for an airline that has been under siege for weeks from hundreds of thousands of customers wanting refunds and has had to double the size of its call centre to cope.

Problems are compounded by restrictions imposed this week at Sydney Airport which has put a 450-a-day limit on international arrivals, with just 50 passengers from New Zealand allowed, excluding transits.

Melbourne's closed because of the Covid-19 flare-up and that has inevitably led to more pressure on Brisbane flights which were overloaded at the weekend, leading to more bad publicity for the airline which has taken a PR hammering for weeks.

Its top managers have been working regularly for weeks on health and border issues with the Government.

The airline's chief commercial and customer officer Cam Wallace said the airline was working closely to understand and support the efforts to contain coronavirus at the border.

Housing minister Megan Woods says air capacity and isolation rooms need to match. Photo / Mark Mitchell

''We accept this is a necessary short-term measure given the limited capacity in quarantine facilities and we're keen to do what we can to help New Zealand's continued success in its fight against Covid-19," he says.

Wallace used to have the title of chief revenue officer - when the airline had annual revenue of around $6 billion a year. Early on in the pandemic this was forecast to collapse to as low as $500m.

One ray of light is its domestic network that has been rebuilt to close to 75 per cent of what it was last year and yields are looking healthy as corporate travel slowly bounces back.

That willingness to travel is largely attributable to New Zealand's success to date in stamping out Covid in the community which is something Air New Zealand, by cutting international bookings, can help with - at a cost.

By early afternoon its shares were down more than 2 per cent to $1.42 while the rest of the market was positive.

In a deadly serious game of ''Survivor: Airlines'' that domestic jump contrasts with Air New Zealand's rivals overseas, notably Qantas which has had to cancel domestic services soon after reinstating them as the disease sparks up across the Tasman.

The Government is also talking to Emirates and Singapore Airlines about limiting their New Zealand-bound operations.

A Singapore Airlines spokesman said it was working with the Ministry of Transport to ensure inbound flights did not place any additional burden on New Zealand quarantine facilities.

''We continue to monitor passenger numbers on inbound flights to New Zealand and where necessary will make adjustments to loads to ensure we do not contribute to an overwhelming of facilities,'' he said.

Qantas has had to re-jig its domestic schedule because of the Melbourne Covid-19 outbreak. Photo / File

The Board of Airline Representatives says its members are prepared to help the Government solve its accommodation supply problem and will be limiting inbound passengers as needed.

"However, there is a need for a structured process to manage quarantine, so airlines can set their schedules with confidence. International airlines looking to return to re-establish international routes and rebuild their businesses will consider New Zealand alongside other destinations,'' says its executive director Justin Tighe-Umbers.

Putting a hold on bookings is an anathema for an airline and Air New Zealand may look for something else in addition to certainty.

The Government wants it to run as a commercial operation and so questions over some sort of compensation may be asked.

At the same time it may also want to talk some more to the Government about that interest rate of up to 9 per cent it will face when it dips into the loan.