Quick bite: Are we pricing tourists out of NZ?

In this quick bite, Air New Zealand CFO Richard Thomson lifts the lid on why the airline’s recovery has been harder — and more expensive — than expected. With soaring visa costs to a sharp drop in visitors from China, are we pricing ourselves out of the tourism market? And how is Air NZ staying optimistic as it rebuilds for the future?Hear more in our most recent episode, 'Air New Zealand on facing headwinds'.

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Episode Transcript

Speaker 1 (00:00):
You're listening to a share of these podcast a couple
of years back, I think when you had the capital
rays that sort of set yourselves up for all of this.
Twenty twenty two, you were talking about being app at
about ninety percent of COVID levels. By now, yes, it's
right nowhere, nowhere near it.

Speaker 2 (00:14):
I think we're at about eighty eight of pre COVID
levels eighty seven, but at huge cost. All these rented
Triple sevens, all these rented engines, a whole bunch of
new aircraft that we're paying for in terms of depreciation
and invested capital that aren't doing anything. And so while
we're close to that level of flying, it's coming at

(00:38):
a significant cost burden that what we didn't anticipate.

Speaker 1 (00:41):
Be nice to get some tourists too, it would something
like what I think I read fifty percent or fifty
five percent levels coming out of China compared with pre
COVID levels. Obviously that's an industry wide problem, but it's
it's it's another one of those levers that any Zeland's
already always been quite keen to so pull and support

(01:02):
what's going on there.

Speaker 2 (01:03):
At a total country level, I think we're at eighty
seven eighty eight percent of where we were visitor arrivals
pre COVID. But within that number, averages are deceiving. So
within that number, actually the US is ahead of where
it was pre COVID. It's the exchange rate of US
tourists coming to New Zealand now. Actually the exchange rates
amazing for all the reasons why it's tough for a

(01:24):
key to travel to US at the US at the moment,
so US is sitting actually well above where we were
pre COVID. Australia just behind. I think they might be
ninety two ninety three percent of where they were, but
they're strong to demand out of Australia. So it's one
of our best performing markets, as you say or allude

(01:46):
to the big gap at the moments out of China market.
So we are I think half all very close to
half of where we were before.

Speaker 1 (01:55):
I think I've read somewhere it's like over five hundred
dollars for someone to come here before they've even bought
the ticket. Right, there's a huge visa cost, and then
you've got that extra visa levy that's been put on
for tourism and conservation purposes and instead of pricing ourselves
out of the.

Speaker 2 (02:13):
I don't think it helps, So I'm not for sure
it's five hundred dollars, it's four forty one I think
for the visa.

Speaker 1 (02:20):
And then the hondy on top and then on top.

Speaker 2 (02:22):
So it is expensive us in our Singapore office a
couple of weeks ago talking to the team up there,
and there's no doubt it's a friction point compared to
other countries who have got much lower sort of costs
of entry. And I think one of the tough things
with the visa is that it's it's a levy that's

(02:44):
imposed at the time people are making decisions about where
they're traveling. It's not like they've arrived in country can't
do anything commitive, you know. So there's no doubt in
my mind that it is influencing where people choose to travel.
We are have become a much higher cost destination than

(03:06):
we were in the past, still very desirable and we're
still getting good and bound tourism, but that is a
friction point.

Speaker 1 (03:13):
I think, how on earth do you sort of keep
turning up with a smile on your face then when
it feels this challenge, I mean, you know, Any aircraft
that sets out without knowing when it's going to land,
where it's going to land is in some real trouble.

Speaker 2 (03:24):
Where an airline that's been around for eighty five years,
there's a huge amount of pride in the airline. It
is an amazing place to work. We've got a lot
of people on the staff who have been with the
company for twenty years, like me thirty forty. A lot
of people on the staff have seen the various ups
and downs through the years. People are philosophical. I think

(03:45):
about where we're at in the cycle. We have a
good plan going forward, great fleet plan, great product, you know,
the wide body fleet at the moment, it's just starting now.
We fly the flag offshore lots of different countries, so
where one of the country's biggest cheerleaders, and people just
get a thrill out of that. And it doesn't seem

(04:07):
no matter how tough the situation is. People we just
get that fulfillment and pride out of representing the country
as well as we can, and that's what gets people
or keeps people going. Investing involves the risk you might
lose the money you start with. We recommend talking to
a licensed financial advisor We also recommend reading product disclosure

(04:30):
documents before deciding to invest.