Lockdown announcement gives Air New Zealand a bookings bounce
Tuesday, 21 April 2020
Air New Zealand experienced a bounce in domestic bookings as it was confirmed that New Zealand would move out of level four lockdown next week.
The airline's chief revenue officer Cam Wallace said there was a 'significant' spike in bookings from 4.05pm on Monday, as Prime Minister Jacinda Ardern started speaking.
'The line graph is trending upwards, haven't seen that in weeks.'
An airline spokeswoman confirmed a lift in bookings.
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'We saw some increase in domestic bookings for future months following the Prime Minister's update yesterday. Travel restrictions continue to apply while in alert level three and beyond. Before making a booking, customers are reminded to check the latest information on the travel and transportation section of the Government Covid-19 website and the Covid-19 hub on the Air New Zealand website.'
But economist Benje Patterson, who specialises in the aviation sector, said any boost in bookings was a relative concept at this stage.
'If Air New Zealand is currently flying domestically at 1 per cent of its usual level, then a doubling would only push them to 2 per cent.
'The reality is that until New Zealand's Covid-19 alert level is reduced to level one, there will be very limited domestic air travel. Even under level two, movements of people around New Zealand will be dissuaded. The only material source of demand under level two is likely to be students needing to return to their university towns after being in exile with Mum and Dad. Domestic tourism is likely to be car-based under level two.'
Reasonably significant spike in bookings from 1605 on the @FlyAirNZ website and via the App. The line graph is trending upwards, haven't seen that in weeks! @andykirton
— Cam Wallace (@CamWallace_NZ) April 20, 2020
He said part of the lack of air travel at level two would be driven by the restrictions themselves as well as new social conventions and higher flight pricing.
'With social distancing in full force under level two, Air New Zealand will still only be able to sell half its seats so that passengers do not come into close proximity with each other. The effect of only half-filling planes will be higher prices so that the service makes financial sense for Air New Zealand. These higher flight prices will in of themselves limit demand.
'There is little chance of Air New Zealand getting a sustained and material volume of domestic bookings until there is a clear path back to level one and an increasing confidence that we will remain at such a low alert level.'
Reasonably significant spike in bookings from 1605 on the @FlyAirNZ website and via the App. The line graph is trending upwards, haven't seen that in weeks! @andykirton
— Cam Wallace (@CamWallace_NZ) April 20, 2020
The airline has been hard hit by the Covid-19 outbreak, which has pushed Virgin Australia to the wall.
Air New Zealand is laying off 387 pilots as part of a wider move to reduce its workforce by at least 3750 to make it through.
With Kiwis unable to fly and demand down 99 per cent from normal, Air New Zealand has slashed its flight numbers. It has been offered a $900 million Government loan to keep operating.
Patterson said destination marketing agencies in the regions should kick-start campaigns that targeted local travellers.
'Such campaigns could harness demand for driving holidays to local destinations under level two restrictions. Weekend driving holidays can be undertaken spontaneously without the need to book ahead in such an uncertain world. Although such local visitors would not plug the gap in tourism demand, they would at least create some revenue for local operators. Some revenue is better than zero revenue.'