Chinese tourism surge on agenda

Air New Zealand's Cam Wallace says having more carriers promoting New Zealand is beneficial.

Three years ago Air New Zealand shifted its Chinese tourism strategy to focus on the independent travellers. Until then most visitors coming here from China were part of organised tour groups.

In many cases their New Zealand visit was the last few days of a longer tour that included Australia.

Air New Zealand chief revenue officer Cam Wallace says today's Chinese visitors are a different breed. They are high net worth individuals who fly direct, stay longer and they spend more.

One consequence is that Air New Zealand can move the Chinese visitors around the country.

Wallace says: "We want to sell them more than Queenstown, Auckland and Christchurch. These were the places they would visit on the traditional Chinese guided tour.

"We now have the opportunity to take them to Northland, the West Coast or elsewhere. They see more of the country and have a bigger economic effect," he says.

Switching Air New Zealand's focus to independent travellers also means more direct flights between China and New Zealand.

In the past, guided tours would usually fly from China to Australia then take an Air New Zealand or competing flight across the Tasman. Until recently, many of the smaller Chinese airlines, especially those from secondary cities, reflected this business. They offered direct Australian flights.

Wallace says the groups-coming-via-Australia trade has now dried up. There are still groups, but that's not Air New Zealand's focus. Today most Chinese visitors fly direct. Though that means more business for Air New Zealand, it also means other airlines have responded to the increased demand for direct flights between China and New Zealand.

Wallace says: "We have seen a lot of competition emerge, not only from Shanghai and Guangzhou but also from secondary cities and smaller airlines."

Tianjin Airlines is one the most recent new entrants. In December, it began flying three times a week between Auckland and the cities of Tianjin and Chongqing. It joins China Southern and China Eastern airlines.

The increased competition means there are now more carriers promoting New Zealand to Chinese travellers. In turn it means more travel agents market New Zealand as a destination. It's a virtuous circle that Wallace says has a stimulating effect on Air New Zealand demand as well.

"There are two components. One is the top-of-the-funnel or destination competition. In that we are up against Canada, Chile or other destinations. There's a vast array of choices for holidays.

"Getting to the top-of-the-funnel so that people make a conscious decision to visit New Zealand is important. The second part is the airline choice. So, having more carriers promoting New Zealand assists us," he says.

Travel agents are important to Air New Zealand's Chinese market. Wallace says the agents in China have a surprisingly deep and detailed knowledge of what the country has to offer.

"They are acutely aware of the seasonality, the hotels, the shops and the attractions. Chinese agents have some of the highest awareness of any agents anywhere in the world. They are professional and focused."

Online marketing is important to Air New Zealand's Chinese operation. Wallace says about 30 per cent of the airlines sales come through online channels.

It uses WeChat to communicate directly with consumers. Much of this is in conjunction with Tourism NZ promoting New Zealand as a place to visit. Air New Zealand moves in at a later stage to convert the interest into an airline ticket.

He says "Alibaba and Tencent are digital channels we work with to promote the brand. The route to market in China is quite different to the way we operate in New Zealand. We have our own branding and marketing team based in Shanghai. They mainly use digital channels to reach consumers."

Air New Zealand used digital channels at home, and there are long-standing relationships tied to loyalty cards. This means the airline has a lot of data about its customers. Outside New Zealand it knows little about them. Most are one-off travellers coming for a holiday.

"We have very sophisticated trade partners. Some of them are online travel agents, others are traditional travel agents. We use both to stimulate demand. We quite often run joint ventures with travel agent groups. On top of that we target segments with promotions like a reality TV show. We brought some stars to New Zealand for that," he says.

Wallace says when Air New Zealand looked at its China tourism strategy three years ago, it also revisited its product offering and moved upmarket. Among other things that meant changing the aircraft -- from the Boeing 767 to 787.

He says "that gave us the confidence to start promoting our premium products in a more aggressive way. That means Business Premier and Premium Economy. This fits neatly into our overarching strategy of chasing higher-value travellers."

Air New Zealand has a distinct geographic focus in China. Flights from here go to Shanghai, Beijing and Hong Kong.

The Beijing and Shanghai routes mean working in partnership with Air China, and the partner on the Hong Kong route is Cathay Pacific.

Wallace says: "Shanghai is the focus; it's a huge city with deep pools of population."

Air New Zealand is also working with Air China on outbound travellers. Wallace says New Zealanders are increasingly interested in what China has to offer and there's a large expat population here, a number of students and some business travel.

Air New Zealand has been flying direct to China since 2006.

Five years ago there were 81 return flights on the Auckland-Shanghai in the peak November to March season. This year there were 173 return flights, an increase of 114 per cent.

Seat numbers have grown even faster. A number of this year's flights to China used the larger Boeing 787-9 Dreamliner, which has 302 seats compared with 230 on a 767.