Auckland Airport is working to encourage non-stop flights between India and New Zealand.
High demand and limited seats have pushed up air fares by close to 40 per cent since before the pandemic and with
healthy yields for a non-stop carrier and new planes that make flying more economical for them, it is seen as a question of when, not if direct flights will start.
While Air New Zealand has said it won’t be flying the route as it concentrates longhaul aircraft on the Pacific Rim, a recapitalised and resurgent Air India is rapidly expanding its international network and has flown here non-stop before. It flew several repatriation flights when Covid 19 struck.
Here, the new Government has targeted India as a high-growth trade and tourism opportunity and under the previous Labour government a deal was done to widen the number of air services that can be flown between the two countries.
Tourism Export Council modelling for a full tourism recovery in 2025 assumes the start of non-stop services between India and New Zealand and Eagle Aviation Consulting says year-round, multiple weekly services could be viable.
Scott Tasker, Auckland Airport’s chief customer officer, says the company regularly talks with Air India which with Kiwi Campbell Wilson at the helm last year placed the world’s biggest order for new aircraft.
The airline wants to become a key longhaul carrier operating through India’s growing number of large airports.
While New Zealand will take its place in the queue for new Air India services, Wilson has told the Herald this country is on the list.
Tasker said the fundamentals are right for non-stop flights with the equivalent of more than a widebody jet flying in both directions every day.
There were an estimated 300,000 Indian nationals living here that would underpin a big ‘’visiting friends and relatives’’ (VFR) market and around 23 million actively considering a trip to New Zealand.
“For three-quarters of them, New Zealand’s number is one or two in the list of places they want to go next,” he said.
“All of that effectively shows a very strong proposition for direct services when the time comes, everybody flying between New Zealand and India at the moment has to stop at one hub elsewhere to get where they’re going.”
Auckland Airport has crunched the numbers and found already strong pre-pandemic growth has soared:
Before the pandemic, India was New Zealand’s seventh-largest market by passenger volume, and ninth-largest inbound visitor market.
Between 2015 and 2019, passenger traffic between India and New Zealand increased tremendously by 62 per cent, with 320,000 passengers travelling between the two countries annually.
Close to 300,000 Indian nationals live in New Zealand, and those with New Zealand resident visas have increased 25,700 between the end of 2022 and September 2023.
The number of inbound Indian holiday visitors has grown 6 per cent annually to 28,000 in 2019.
These strong fundamentals of the travel market have remained intact through the pandemic, so with the reopening of borders, bilateral traffic movements have rapidly recovered over the past year.
Since borders reopened:
Bidirectional travel between the two countries has recovered swiftly, sustaining above 2019 figures since February 2023.
In the July to September 2023 quarter, recovery reached 134 per cent compared to the same quarter in 2019, largely driven by VFR demand as people are keen to reconnect with family and friends. In the third quarter of last year, about 20 per cent of visitors from India came for a holiday.
Approved visitor visas have also surpassed 2019 levels, averaging 10,000 a month (47 per cent increase in September 2023 versus September 2019).
The New Zealand-India aviation market
In the latest July to September quarter last year, 86 per cent of total traffic between India and New Zealand flew one stop.
Tasker said that since the reopening of borders, airline seat capacity has remained constrained as airlines have yet to fully recover their network and seat capacity to and from New Zealand.
“For example, Thai Airways which had the third-largest market share of the traffic between India and New Zealand remains suspended on the Bangkok-Auckland route, and China Southern which had the 5th biggest market share are unable to carry transit passengers through their Guangzhou hub due to the ongoing suspension of direct air services between China and India.”
He said the strong pent-up demand for travel had significantly outpaced the supply of seats in the market and made it challenging for travellers to find seats at reasonable prices.
Currently, airfares between the popular Delhi-Auckland route over the current half a year (for travel between December last year and this coming May) are on average about 37 per cent higher than those on sale for travel during the same period in 2019.
Tasker said this issue might partially resolve as airlines recover their operations and gradually add seats to/from New Zealand and elsewhere in the global aviation system over the coming months and years.
Popular transit points during the July to September 2023 quarter include Singapore (51 per cent of India-New Zealand traffic), Kuala Lumpur (26 per cent), and Hong Kong (11 per cent).
“The strong travel demand between India and New Zealand was constrained by available seat capacity between New Zealand and key Asian airport hubs, as well as between those hubs and India.”
In effect, travellers trying to move between India and New Zealand are competing for access to airline seats to/from Asian hubs with the large volume of travellers en route to South-East and North Asia, the UK and Europe. Tasker said the airport worked with existing airlines that could launch services and new ones about a future opportunity a couple of times a year.
“It wouldn’t be unusual to share insights and information and update them on the market.”
Air India’s fast climb
Air India has signed up for 470 planes, evenly split between Boeing and Airbus. The order placed last year was estimated to be worth more than $110b at list prices.
Wilson told the Herald then his airline was at full throttle because it is playing catch-up. India has been poorly served by long-haul, non-stop capacity originating in the country.
He said there are just 40 widebody jets operating out of India, which has a population of 1.4 billion people. By comparison, Singapore Airlines has about 130 twin-aisle planes while Air New Zealand has 18, based in a country with a population of around 5 million.
Serving the Indian diaspora, which is tens of millions strong, provides a base of demand to and from the country.
“The order of aircraft is taking advantage of the clear and natural growth,” Wilson said. “It is serving a market that has been underserved from a non-stop international perspective, certainly by an Indian carrier.”
India, with 1.4 billion people, has a rapidly growing middle class that will spend more on air travel.
That Indian middle class is predicted to grow from 80 million people in 2018 to 580 million by 2025.
“I think if you look at how India is transforming and positioning itself on the world stage in every sphere, it is more confident to apply more influence and being more of a player at the table,” Wilson said.
Air India has started flying its new widebody aircraft.
This week the first of its A350-900s Air India’s A350 domestically for crew familiarisation, which will be followed by longer-haul flying to destinations across continents.
The aircraft is the first of Air India’s 20 Airbus A350-900 on order, with five more scheduled for deliveries through to March, part of the firm orders for 250 new aircraft from the European plane maker.
When the aircraft was delivered just before Chistmas, Wilson said it marked a red-letter day for Air India.
The aircraft was an embodiment of the airline’s continuing transformation.
“It is also, in many ways, a declaration of Indian aviation’s resurgence on the world stage.”
Tasker said Wilson knew the New Zealand market well.
“As they get new fleet, new fleet they’ll obviously need to decide what, what their priority list is where they put those aircraft. Hopefully New Zealand looks like a good opportunity.”
Simon Russell, the managing director of Auckland-based Eagle Consulting, says travel demand at both ends of the route should be significant with Europe/Middle East traffic feed over either Mumbai or Delhi plus local demand.
“Demand traffic feed at both ends of the routes offers potential for sustainability all year and multiple weekly services, subject to pricing affordability. Demand for visiting friends and relatives (VFR) from Oceania, as well as outbound travel demand from India for tourism and VFR, could be advantageous for Star Alliance with both Air India and Air New Zealand in the global alliance.”
In the UK, the ethnic Indian population is about 1.8 million, and a UK-India-NZ route could also be attractive for dual destination travel – to visit India and visit New Zealand and Fiji.
“The NZ-Pacific side is attractive for tourism, with Indian outbound travel demand at 13 million trips per annum, some forecasts indicate travel growth by the world’s largest population of 1.4 billion reaching 80 to 90 million outbound trips per annum.”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
