Australia and New Zealand’s air cargo niche business continues to grow

By: | at 07:00 PM | Channel(s): Air Cargo News  

By Karen E. Thuermer, AJOTThe jury is still out as to the impact the US-Australia Free Trade Agreement (AUSFTA) is having on cargo volumes between the United States and Australia. The AUSFTA was only signed into law on January 1, 2005.
“The impact of such agreements takes time to germinate,” comments Sal Sanfilippo, North American director for Air New Zealand Cargo.
Meanwhile, Bruce McCaffrey, Qantas vice president of Freight, the Americas, comments that his carrier has seen the route grow about seven percent.
Both carriers, which compete in this corner of the world, can gain from AUSFTA. The AUSFTA, which eliminates duties on over 97% of US tariff lines for Australia’s non-agricultural exports (excluding textiles and clothing) also provides for improved access for Australian agriculture, with 66% of agricultural tariff lines going to zero from day one and a further nine percent cut to zero within four years.
Other than the two airlines, few other carriers service the route, therefore making it virtually a niche business. The route offers a good income. Unlike Qantas, Air New Zealand depends heavily on earning a large portion of its revenues from its passenger service, especially on its New Zealand - Australia route.
Niche business
Currently, Air New Zealand operates only one cargo flight: a 747-400, which it leases from Atlas. The freighter runs from Frankfurt, Chicago, Honolulu, Auckland, Melbourne, Shanghai and back to Frankfurt. Qantas offers five freighters weekly from the United States to Australia that then fly onward to China before coming back. By doing so, the airline keeps its freighters filled.
Air New Zealand’s point-to-point passenger service includes flights between New Zealand to Japan, Singapore, and Hong Kong, in addition to its service to the United States. The United States is particularly important to Air New Zealand. In November, Air New Zealand doubled its service between San Francisco and Auckland, from three to six flights per week.
“Passenger demand warranted that we do this,” Sanfilippo says.
In addition, Air New Zealand operates a flight from Auckland to Los Angles that goes on to London. Likewise, that flight backtracks via London, Los Angeles and Auckland.
In an effort to upgrade its passenger service, the carrier has added Boeing 777-200ER aircraft on the San Francisco/Auckland route. In October, Air New Zealand took possession of the first of eight such aircraft ordered by the airline. In November, the airline took delivery of its second B777 aircraft.
In addition, the 777s will be placed into New Zealand’s daily Auckland-Singapore services, some trans-Tasman flights at peak times and a variety of other routes as each new aircraft is introduced over the next year. Their biggest benefit: the 777s will enable Air New Zealand to look at new markets. It’s most recent application is to commence non-stop services between Auckland and Shanghai.
“The eight new aircraft will gradually replace many of our B767-300s and help the carrier to grow our international fleet,” says Air New Zealand’s CEO, Rob Fyfe.
Air New Zealand is also doubling its B787 order and purchasing two more B787-8s, with delivery of all four expected in 2010 and 2011.
Air New Zealand’s long-haul fleet currently comprises nine Boeing 767-300s and eight Boeing 747-400s. By early 2007 the fleet composition is expected to be eight B777-200ERs, eight B747-400s and five B767-300s, as leased aircraft will be returned as contracts expire.
The extra flights offer more cargo opportunity for shippers, particularly given the fact that New Zealand is export-oriented and the United States is a large consumer market.
“Economists are predicting a downturn in New Zealand’s economy, however,” Sanfilippo expresses. “The New Zealand dollar has strengthened, which hurts exports.”
Like all carriers, soaring fuel prices have continued to be a top challenge for Air New Zealand, heightened by “capacity dumping” on the Tasman.
More capacity “Down Under”

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American Journal of Transportation