Air New Zealand will resume flying all of its Auckland domestic routes when the region moves to alert level 2 on Monday even though physical distancing makes running the network financially marginal in the long term.
The airline warns that it can't offer its lowest fares because of reduced capacity. After yesterday's announcement of its first loss in 18 years, it said it could cover costs of flying planes with the required empty seats but extended distancing would be financially "impactful".
The airline has been operating a reduced domestic schedule in and out of Auckland while it has been at alert level 3. Most of the rest of Air New Zealand's domestic network has remained unchanged but with physical distancing in place.
From Monday it will also be mandatory for customers travelling during alert level 2 to wear a face covering while on board. Customers are encouraged to bring their own, or a mask will be provided by the airline before boarding.
Chief executive Greg Foran said there will be more flights to and from Auckland, but physical distancing will be in place across the airline's domestic network so fewer seats will be available for customers.
Physical distancing means the airline can only sell just under 50 per cent of seats on a turboprop aircraft and just 65 per cent on an A320.
"We won't be able to offer our lowest lead-in fares until physical distancing measures are removed. This has put huge pressure on our business as it means we need to move some of our customers to other flights," he said.
Face coverings have been a requirement for those flying out of Auckland during alert level 3 and passengers have been "really cooperative" to date.
"We support the Government's move to mandate the wearing of face coverings on public transport at alert level 2 from next week."
All Air New Zealand domestic cabin crew and customer-facing staff will wear masks and gloves, and pilots will wear masks when interacting with passengers or moving through airport terminals.
The airline has extended fare flexibility until 11.59pm, Sunday September 6.
Customers who hold a ticket booked directly with Air New Zealand for a domestic flight until this date may opt to hold their fare in credit and can do this via the airline's online booking tool while customers who have booked via a travel agent should speak with their agent to cancel their booking.
Passengers who no longer plan to travel are asked to do this as soon as possible to help the airline ensure physical distancing is possible and for other customers who need to travel.
Air New Zealand already has a number of safety measures in place to keep customers and staff safe, which will continue in alert level 2.
• Passengers are encouraged to check-in for their flight via the Air New Zealand app, and allow extra time to process through check-in and security
• For those checking in at larger airports, every second self-service kiosk will be operating to support physical distancing.
• There will also be floor markers for queuing at check-in counters, service desks, bag drops and departure gates, and fewer customers will be boarded and disembarked at a time
• Inflight, seating will be allocated to allow an empty seat between customers travelling alone. The airline will aim to keep families and some travelling companions together, so there may be some people sitting together with no additional space between them
• Food and beverage services on all domestic flights will not be available to minimise contact between customers and cabin crew. Customers should let cabin crew know if they would like a cup of water
• Jet aircraft cabins have hospital operating theatre-grade HEPA filters installed, which filter out viruses.
Air New Zealand's Auckland lounges and valet parking will reopen from Monday, August 31.
Masks will be available for customers at all lounges.
Due to capacity restrictions under alert level 2 the maximum number of people able to access any of the airline's lounges is capped at 100.
Air New Zealand will continue to review its domestic network based on demand and physical distancing requirements.
When it resumed flying in alert level 2 in May the airline was surprised at the swift rebound in demand and had built up to about 70 per cent of its pre-Covid network before the re-imposition of alert levels earlier this month.
Chief financial officer Jeff McDowall yesterday said social distancing was commercially challenging for the airline.
"We can sort of cover our costs at that level but we're not really able to make any meaningful contribution to our fixed costs."
Jetstar, which also rebuilt its network quickly, has suspended services for now due to the social distancing requirements.