AIR NEW ZEALAND: THE CURRENT STATE OF TOURISM

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AIR NEW ZEALAND THE CURRENT STATE OF TOURISM
Ord Minnett Tourism Conference November 2000
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CONTENTS

• OUR INVOLVEMENT WITH TOURISM
• GLOBAL TOURISM AND AVIATION TRENDS
• NZL TOURISM TRENDS
• DRIVERS OF TOURISM TO NZL
• THE ROLE OF GOVERNMENT
• AIR NEW ZEALANDS INITIATIVES

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OUR INVOLVEMENT WITH TOURISM

• Inbound
• Transportation - The first point of contact with
  NZL, sets the mood for the trip, the face of NZL.
• Product Development - Helping to create the
  motivation to travel and turning it into an
  actual experience, driving tourists to NZL.
• Marketing - NZL and the Region as destinations.
• 99 of visitors to NZL arrive by air.
• We carry 760,000 passengers p.a. into NZL.
• We spend NZD 202 million p.a. on offshore
  marketing and business management activities.
• Outbound
• We carry approximately 50 of the outbound
  passengers from NZL.
• Domestic
• We carry approximately 70 of the domestic
  passengers within NZL.
• We spend a considerable amount stimulating and
  supporting domestic tourism. eg Gotta Go fares,
  regionally based campaigns and sponsorship such
  as the NPC and the Ellerslie Flower Show.

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GLOBAL TOURISM AND AVIATION TRENDS

• Improvements in technology will make longhaul
  travel easier and more accessible..hence NZL
  will be more attractive to a larger market.
• Regional experiences are more in demand by
  leisure traffic. Worldwide people have more
  leisure time and higher income, therefore more
  opportunity to travel.
• In 1999 total global traffic increased 6.9,
  capacity increased 5.5.
• Growth driven by price sensitive leisure traffic.
• Intense competition will keep yields under
  pressure but fuel prices are forcing airfare
  increases.
• Over the foreseeable future demand for aviation
  products services will continue to double every
  10-14 years.
• Starting to see changing behaviour of airlines
  focusing on revenue quality not quantity.
• Airlines are having to differentiate themselves
  as either full service or value based carriers.
• Passenger traffic is expected to increase at an
  average annual rate of around 5 between 1999 and
  2010, with freight growth being nearer 7 per
  annum.
• Current year global forecasts are for a 6
  increase in traffic and a 5 increase in capacity.

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NZL TOURISM TRENDS

• NZL as a long haul destination is a choice for
  the experienced traveller.
• Alliance activity is giving us access to more
  potential travellers.
• Inbound tourism is forecast to continue to grow
  with NZL gaining a larger share of the total
  market.
• NZLs share of world tourism has risen over the
  past 8 years from 0.21 to 0.25 in 1999.
• Outbound tourism will still grow but the weak NZD
  has slowed forecast growth.
• Domestic tourism will grow as some outbound
  travel will be converted to domestic travel.

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DRIVERS OF TOURISM TO NZL

• Events.Millennium, Americas Cup, Olympics and
  Rugby World Cup.
• Developing market segments.MICE, fly / cruise.
• Weak NZD making NZL a quality product which is
  very attractively priced.
• Destination awareness via promotion by tourism,
  trade, sport and business.
• 100 PURE NEW ZEALAND, Wool Board, Dairy Board,
  All Blacks, David Tua, Movie Industry.

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THE ROLE OF GOVERNMENT

• Tourism is an ideal industry to develop. The
  political, economic and social impacts are
  positive and it can be environmentally sustained
  if it is managed well.
• We need the Government to
• Provide clear direction pointing to tourism as a
  sunrise industry.
• Help co-ordinate the profile of NZL to provide a
  consistent and appealing message to the world.
• Recognise what tourism brings to the economy and
  reinvest that in the industry.
• AIR works closely with Tourism New Zealand as the
  two major investors and representatives for
  tourism marketing offshore.

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AIR NEW ZEALANDS INITIATIVES

• Business Strategy
• Consolidate regional strength with the enlarged
  Air New Zealand Group.
• Develop a strengthened position from Asian and
  European markets in conjunction with SIA.
• Capitalise on STAR membership with increased feed
  from existing markets, access to new markets and
  better global coverage.

• Strategic Framework

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AIR NEW ZEALANDS INITIATIVES

• Network Strategy
• Focus on core routes based on Australasia and the
  Pacific Rim, in particular the key markets of
  Australia, Japan and USA.
• Improve connections to alliance partners.
• Australasian focus is on
• The single aviation market.
• Hub points in AKL, SYD and MEL to provide
  critical mass to routes by connecting domestic
  and international traffic. This strategy also
  provides more destinational options to the
  traveller with good connections.
• Pacific Rim focus is on
• LAX and beyond.
• Best schedule to and through the Pacific.
• Establishing a network of Asian gateways with AIR
  and Ansett to cover origin markets and European
  through traffic.

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AIR NEW ZEALANDS INITIATIVES

• Marketing
• Promote NZL and the South Pacific as destinations
  offshore.
• Leverage brand and airline preference for AIR.
• Convert motivation for travelling to actual
  travel via consumer interests / activities
  promotion, web-sites and products.
• Capitalise on opportunities provided by MICE and
  events.
• Align our activity with Tourism New Zealand
  strategy where appropriate. Help to build the
  NZL Incorporated image.