Surge in flights forecast to help push annual spending by visitors from China beyond $1b in next year

China's big three state-owned airlines are spreading their wings and heading for New Zealand this summer and have room for the number of flights to double.

Auckland Airport says there will be a 61 per cent increase in the number of seats over the next few months following an agreement which allows services between the two countries to double from 21 to 42 a week from each country.

The surge in flights from China is forecast to help push annual spending by Chinese visitors beyond $1 billion in the next year and the number of Chinese coming here is forecast to more than double to more than half a million within a decade.

China Eastern Airlines will be the latest mainland Chinese carrier to touch down here with one of its A330s scheduled to arrive from Shanghai on Tuesday, initially with four flights a week which will increase to seven flights a week in January.


The Shanghai-based airline is one of the 10 biggest carriers in the world and its services will add another 47,000 seats to the route Air New Zealand was keen to keep for itself year round and will lead to what one travel industry leader says will be a "good scrap".

Guangzhou-based China Southern started with just three services a week to Auckland in 2011 but has built up to twice daily services this summer, putting on a bigger plane to meet high demand over the summer peak and Chinese New Year. It describes New Zealand as strategically important.

And Air China - based in Beijing - is in talks to form a joint venture with Air New Zealand which is likely to see direct links resume with the Chinese capital.

The rapid expansion by the big Chinese state airlines has been fuelled by the boom in leisure travel by increasingly wealthy Chinese with permission to fly to a growing number of "approved destinations".

The airlines are also seeking international markets as domestic growth is constrained, partly as a result of most airspace being controlled by the military. They also face increased competition from high-speed trains linking major cities which allow passengers to avoid airport hassles so are looking overseas for growth and find yields here more attractive than in Australia, another favoured destination.

Other airlines are also stepping up services between here and China.

Air New Zealand is now using one of its new Dreamliners on the Auckland-Shanghai route and its alliance with Singapore Airlines, starting next month, will give its passengers easier access to points in China through the Singaporean carrier's network into secondary Chinese cities.

Cathay Pacific flies into Hong Kong from Auckland and says its bookings are very strong.


"The traditional summer peak season remains strong with very full flights across all cabins supporting the need for us to operate two flights per day to Hong Kong through until mid March 2015," said the airline's New Zealand sales manager Mark Pirihi.

It plans to use the world's newest widebody passenger plane - the Airbus A350XWB - on the route in 2016.

Transport Minister Simon Bridges said the air services deal with China was part of a broad strategy by New Zealand to liberalise arrangements with a long list of countries.

Air links with China have risen to the recently negotiated 42 flights a week from just seven flights in 2004.

"China's got an open but incremental policy when it comes to air services agreements. We would be keen to liberalise as far as China's comfortable," Bridges said. "The modelling has us by 2020 [at] half a million visitors but that's probably conservative - the possibilities with China are only limited by our own ambition."

Auckland Airport's general manager aeronautical commercial Norris Carter said passenger growth between China and New Zealand had increased significantly in the past three years, with an average growth of 21 per cent year on year.

Since China brought in new laws last year to crack down on cheap shopping trips the number for free independent travellers (FIT) had grown strongly.

Immigration New Zealand figures showed FIT visa applications had increased 29 per cent in the past 12 months.

"This indicates that it is not only the volume of passengers that has increased, but also the quality of the passenger mix. We believe all of this has contributed to the airlines increasing their capacity and we believe this trend will continue," Carter said.

There was huge potential for the continued expansion of Chinese air services to New Zealand.

"From an airline perspective, New Zealand is also not as competitive as the Australian market. This means airlines are generating higher yield on China to Auckland routes than on China to Australia routes, making us an attractive proposition for airlines."

About 100 million Chinese travel overseas a year and this is expected to double by 2020.

Tourism New Zealand promotes this country in China and its general manager for Asia David Craig said the rate of growth of arrivals to New Zealand had fallen following the Chinese law change but this was changing.

"We would expect double-digit growth into next year and within that more of the higher value visitor. Travel for the emerging middle class is an essential part of life."

China is our second biggest market behind Australia in visitor numbers and spending. Chinese visitors spent $979 million here in the year ended September and Craig said he expected that figure to pass $1 billion soon.

New carriers have to earn their stripes with the travel industry - as agents have loyalty to existing operators - but Flight Centre product general manager Simon Mckearney said price also talks for Kiwi travellers.

"If their price is right they'll pick up the Kiwi consumer," Mckearney said. "We weigh up what we have with traditional airline customers - we have long term partnerships with the likes of Air New Zealand so we tread carefully."

The arrival of China Eastern would be an irritant for Air New Zealand.

'You've got Air New Zealand up against a massive Chinese government-owned airline - it'll be a good scrap."

Q&A: Demand for services continues to grow

Why are the big Chinese airlines coming here?

There's growing demand for NZ as a destination among the growing Chinese middle class, the airlines need to redeploy planes and this market still offers relatively high yields compared to Australia.

What's the outlook?
The number of air services allowed has doubled. Auckland Airport is forecasting Chinese visitor numbers to more than double by 2020 to around 500,000. More than 100 million Chinese travelled overseas last year and this number is growing at a double digit rate. New Zealand is seen as an aspirational destination by increasingly adventurous travellers.

Are we ready?
Largely, but there's a shortage of Mandarin speakers in the tourist industry and there's a risk hotel capacity will lag behind the number of airline seats.

What does it mean for flights to China?
More capacity usually means cheaper fares or at least pressure to keep them down. Air China's planned flights to Beijing add another great destination in China in addition to Gaungzhou and Shanghai. The big Chinese carriers also offer onward flights to Europe, in competition with Air NZ.