It may seem obvious – but tourism and aviation really are closely linked.Tourism NZ chief executive Kevin Bowler made the point last week during a guest presentation at Victoria University in Wellington on the new tourism marketing strategy to 2013.
It may seem obvious – but tourism and aviation really are closely linked.
Tourism NZ chief executive Kevin Bowler made the point last week during a guest presentation at Victoria University in Wellington on the new tourism marketing strategy to 2013.
He picked aviation linkages as a key challenge facing the industry.
“I don’t think as a country we necessarily appreciate the aviation challenges that we face,” he told an assorted mix of students, industry professionals and members of the public.
“A huge number of our markets are connected to NZ by only one carrier and often not by daily or other daily services, and there is a sense that there is a choking of supply to get yield up.”
Mr Bowler said he was not talking about any one airline but, later, used Singapore as an example.
“Since Air New Zealand came off Singapore, SQ [Singapore Airlines] have gradually just reduced capacity to the point where they can improve prices and improve yield... so even from the markets around Singapore and Singapore itself, it’s actually expensive and difficult to buy a ticket to NZ.”
West coast blues
Another challenge for New Zealand is competition against Sydney for visitors from the United States’ west coast.
According to Mr Bowler, tickets to Sydney are selling for $US100-200 less than tickets to Auckland – even if visitors fly through Auckland to get there – with the lower prices driven by hard competition between Via Australia, Delta and Qantas.
Air costs are a relatively small part of total holiday costs but ticket prices are still an important factor when visitors are choosing their destination, Mr Bowler said.
“So we are looking for areas where there is more aviation competition, and we’re working with other parts of government to encourage that competition where we see the right opportunities.”
Some good news for tourism from the US: Continental recently announced that it will resume services from Houston to Auckland at the end of next year.
Tourism NZ commissioned independent economic research to see whether Continental would simply steal market share from Qantas and Air NZ or help grow the market for visitors to New Zealand.
It concluded that the new daily service is likely to create market growth of about 10%.
Diversifying the portfolio
In the year to June 2010, Australia contributed about 45% of visitors to New Zealand and made up about 40% of total visitor expenditure.
This reliance is both a blessing and cause for concern. On the one side, the Australian market is easy to stimulate, enjoys low flight prices and high flight numbers, and is a year-round market.
But Australians tend to spend less than other visitors and, as any good stock investor knows, a non-diversified portfolio increases vulnerability.
To manage this risk, Tourism NZ is starting to focus more on long-haul markets, particularly the US, China and other Pacific Rim countries.
Germany and its neighbours remain a focus for the medium-term – though Mr Bowler expects European tourism to shrink in the long-term due to rising fuel prices and a “more sophisticated understanding of environmental impact”.
For now, the challenge for Tourism NZ is to ensure sufficient investment in the valuable long-haul markets but “continue to realise that in the short term we really need Australia to keep this industry healthy and alive.”
