Christchurch Airport spent three years working on plans to attract American Airlines to the city.
The success of that effort is a big coup for the airport, the country’s second biggest, whose underlying profit has soared from $14.3 million to $66.9m during the past five years.
Justin Watson, chief aeronautical and commercial officer, says attracting one of the biggest airlines in the world was a long, painstaking process.
• Premium – American Airlines’ big NZ push: What’s behind it
• American Airlines’ big New Zealand move – Auckland to Dallas, Christchurch to LA
• American Airlines mechanic accused of sabotaging flight
• American selling $8.1m Sentinel penthouse after bolthole purchase: ‘nobody’s going to bomb NZ’
“We had to be very patient. You’ve got to build a story of the opportunity,” he says.
“For Christchurch and the South Island, that story is the opportunity to be the only airline flying direct and to own the market.”
This week American announced that, in association with Qantas, it will operate flights to Los Angeles three times a week from October next year to March 2021 as part of a big expansion into this country next summer.
Watson says the key was to build a value argument for the airline. The airport and others meeting the airline outlined how the South Island and New Zealand would attract a higher proportion of free and independent travellers, older “silver surfer” types who stay longer and spend more.
Americans who enter the country through Christchurch Airport spend 32 per cent more and stay 34 per cent longer than if they arrive elsewhere.
The average US holiday visitor who enters New Zealand through Christchurch spends $6015, while the average for the country is $4553.
“We said with this type of passenger you’re going to get a price premium. They’re not just going to get any passengers, they’re going to be more likely to pay for premium economy and the like,” says Watson.
As they worked with American during the past three years, airport staff, tourist authorities and operators went to the United States to spread the word about Christchurch and this country. They followed a similar model to the approach used in China, a market that has boomed for Christchurch with more air links.
“We will build high value itineraries. We’ll work with the trade and the media (in those countries) alongside Tourism New Zealand to unlock those high value markets and get them to come to the South Island rather than Dubrovnik,” he says.
The airport is 75 per cent owned by Christchurch City Council and 25 per cent by the Government. Watson says luring American would have cost more than $1 million, and there will be hefty ongoing spending on marketing, but these costs would be shared between the airport, tourism authorities and operators.
The airport says that based on government data, the seasonal service is forecast to bring in an extra $52m in visitor spending for New Zealand, with $40m of that in South Island regions.
The American Airlines flights, using a Boeing 787-8, will be in conjunction with Qantas following approval of their joint business agreement this year. The US carrier has eyed Christchurch since 2016 when it resumed flying to Auckland from Los Angeles, which it says is one of its most profitable routes.
Tourism New Zealand data indicates that almost three-quarters of United States visitors to New Zealand visit another country on their vacation, with Australia being the most popular dual destination.
With the partnership with Qantas and that airline’s connections to Christchurch from Sydney, Melbourne and Brisbane, it makes it easy on one ticket to have “open jaw” itineraries — visits to both countries.
The service will also carry valuable freight between LA and the South Island.
A PwC report commissioned by the airport in 2015 estimated that only about half of the available freight was able to be exported out of the South Island because of a lack of wide bodied aircraft and it is estimated that the new service could carry about $1m worth of freight per flight.
Christchurch has aggressively targeted overseas airlines and during the past five years China Southern has started year-round services non-stop to Guangzhou, and Cathay Pacific to Hong Kong.
These services are reflected in arrival figures. From August 2015 to this year, arrivals from China are up 142 per cent to 60,000, and Hong Kong up 139 per cent to 7000.
Watson says while nationwide arrivals from China are down by about 10 per cent for the year, in Christchurch in the last year they’re up by the same amount.
In the past year Christchurch handled 6.93 million passengers, up 65,000 on the previous year. (Auckland Airport, the country’s biggest, handles more than 20 million).
For a time, Air New Zealand flew two Boeing 747 services a week between Christchurch and Los Angeles but withdrew from the route around a decade ago as the global financial crisis hit demand. That airline — which is increasingly concentrating on flying out of its Auckland hub — has been under pressure from some of its Christchurch shareholders and other locals to reinstate international services.
Watson says it is encouraging that Air New Zealand has decided to operate to Singapore this summer in conjunction with joint venture partner Singapore Airlines.
“The good news for us with Air New Zealand is that they’re putting on wide bodies with Singapore service and if that’s successful there could be further opportunities to grow. North America is a massive market.”
In a sign of the growth of that market, Air New Zealand is about to step up frequency on its non-stop Auckland-Chicago service and has just announced it will fly from Auckland to New York next October, a flight that would the longest in its network.