Deal with UK opens up skies for Air NZ

New flights between Britain and the United States are on the cards for Air New Zealand, with the signing of a new, liberal air services deal with the British.

The airline is hoping to start snaring a greater share of the New Zealand-bound European tourist market now that the British Government has lifted flight limits.

The deal, signed by the New Zealand and British Governments, could not have come at a better time for Air New Zealand as it prepares to introduce the first of its re-fitted Boeing 747-400 planes.

It is hoped this long-awaited, $20 million-a-plane overhaul will help to take the more lucrative premium passengers off bigger and wealthier rivals.

Britain and New Zealand had restricted each other's airlines to only seven flights a week - a deal that has frustrated Air New Zealand, which feels it can fill more than one plane a day from Heathrow.

The international aviation sector is restricted by several such inter-governmental agreements that dictate what services differing airlines are allowed to offer on particular routes.

Now, Britain and New Zealand will allow nearly unlimited access to each other's airlines.

British Aviation Minister Karen Buck described the agreement as "creating the most liberal agreement of its kind".

"I am delighted by this new deal, which will be good for consumers and for the aviation industry in the UK and New Zealand. I hope it will become a model for other future agreements," she said.

"Airline passengers already benefit from liberal arrangements in Europe. This is a major step towards extending those principles into our aviation relations with other countries."

Air New Zealand would not say publicly what kind of new services it might launch as a result of the deal.

"We look forward to the arrangement being ratified by the New Zealand Government and, once completed, Air New Zealand will look to access additional slots in the UK, a process that may take some time," it said.

Ian Thomas, a senior consultant at the Centre for Asia-Pacific Aviation, said the new deal should be seen in the larger context of negotiations between the European Union and the US over air-service rights across the Atlantic.

Those talks were nearing completion, with a deal possible within the next 12 months.

One obvious issue with liberalisation was that Air New Zealand wanted to fly into and out of Heathrow, where competition for take-off and landing slots was fierce.

"They have developed the West Coast as a strong access point into the US market. If they can go beyond that and service the UK market more out of the West Coast then that's got to be to Air New Zealand's advantage. The crunch point still remains Heathrow."

Any opening up of the British routes will also bring challenges for the airline, which has to try to get the mix of aircraft types and sizes matching the cities it flies to.

Air New Zealand's new Boeing 777-200s will take over more of its flights to the US. Eight 777s have been ordered. The first is due to arrive in early September.