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American reduces Auckland to seasonal service
August 25th 2017
American Airlines’ push into the New Zealand market would be best described as overambitious. Read More » After the U.S. carrier launched a Los Angeles-Auckland B787-8 route in June 2016, American has had to gradually scale back operations to New Zealand’s largest city because the market simply is not big enough and local heavyweight, Air New Zealand, is not making any concessions.
“We have taken a look at our Auckland/Los Angeles route and determined that next year, we will move to seasonal service from October to March, which is the peak winter travel season from the US,” American Airlines Australia and New Zealand general manager, Simon Dodd, told Australian Aviation.
This announcement did not come as a surprise. In April, American said it would suspend flights to Auckland for two months through to October 4 and after that would operate the route as a seasonal service. GDS data confirms this. The Los Angeles-Auckland route will be pulled again starting March 23.
Analysts have long questioned American’s decision to fly to Auckland. Flag carrier, Air New Zealand, has a firm grip on the U.S.-New Zealand market and American’s oneworld partner, Qantas Airways, offers multiple flights a day from Australia to Los Angeles. Both Air New Zealand and Qantas are known to offer much better products than American.
New Zealand has experienced an onslaught of Chinese and U.S. carrier in recent years. Although this has lessened somewhat, attention must still be paid. “It’s certainly been improving in the last few months. The reality we’re seeing is American [Airlines] announcing it’s out of the market for two months; it’s just people being rational with capacity management, you know,” Air New Zealand boss, Christopher Luxon, told Orient Aviation in June.
Air New Zealand has a joint venture with United Airlines across the Pacific. American and Qantas have had their initial application for trans-Pacific anti-trust immunity rejected by way of an “unprecedented” Show Cause Order, which argued there was a “high risk of competitive harm” should the tie-up be approved, considering the combined Qantas and American network would represent more than 60% of capacity between the U.S. and Australia. Moreover, the pair would have the largest market share in more than 200 city-pair markets.
American and Qantas reacted to the rejection with a curious move. They decided to cut reciprocal mileage earning rates across the Pacific, angering many oneworld frequent flyers and prompting some industry experts to suggest this was their way of showing how the lack of an expanded partnership is hurting passengers, thus applying pressure on the regulators to approve the joint venture.
Similarly, following the initial rejection, American announced the cuts to the Auckland route and downgraded its daily Sydney-Los Angeles flights from a B777-300ER, including first class, to a smaller B787-9, resulting in 700 fewer seats a month.
Undoubtedly, Qantas and American will have a much easier time demonstrating that the joint venture is in the interest of passengers if they take something away before doing so.
