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Forsyth Barr

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Transport Titbits — New York, New York</h2>
Air New Zealand&nbsp;(AIR) is to commence Auckland – New York services from October 2020 and at the same time will exit its Los Angeles – London services. These changes are consistent with its Pacific Rim strategy. The new service will utilise its JV partner United’s hub at Newark Airport, and will be the fifth longest commercial airline route globally. As a result&nbsp;Auckland Airport&nbsp;(AIA) would be party to three of the top five longest routes currently (see chart below).
Ultra long haul flying has been enabled by modern aircraft that are materially more fuel efficient than their predecessors. The configuration of AIR’s new service will be its “Code 2” 275 seats, which has a higher prevalence of business and premium economy seats. This limits the weight, allowing the aircraft to fly further, and increases the yield, ensuring its commercial to do so.
The new service will operate 3x weekly, be operated by a B787-9 with 275 seats, and travel time will be 15hr 40m northbound and 17hr 40m southbound. The benefit to AIR of opening up the east coast of the US is a new demand pool, similar to what it achieved with Houston and Chicago in recent years. Consumer demand increases with direct flights relative to having to connect via other hubs. In light of capacity tweaks across AIR’s network in tandem with the new and exited routes, we expect little impact on total capacity.
Ultra long haul boundaries will continue to be tested. Last week Qantas flew a new B787-9 from New York to Sydney (~16,000km) as a test flight with 10 crew members and 40 passengers. It expects to start commercial services on the route as early as 2023 as part of its Project Sunrise initiative.
On other airline route development news look out for the Qantas/American Airlines announcement due next week on the shape of their combined network as a result of the newly minted JV. There will likely be implications for both AIR and AIA.
Transport Titbits Chart of the Week: Longest passenger airlines routes globally
<table class="table table-striped"><colgroup><col> <col> <col> <col> <col> <col> <col> <col></colgroup>
<tbody>
<tr>
<td style="width: 40.8px;">Rank</td>
<td style="width: 95.2px;">From&nbsp;</td>
<td style="width: 84.8px;">To</td>
<td style="width: 83.2px;">Airlines</td>
<td style="width: 64.8px;">Distance</td>
<td style="width: 76px;">Scheduled</td>
<td style="width: 60.8px;">Aircraft</td>
<td style="width: 53.6px;">First Flight</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">1</td>
<td style="text-align: left; width: 95.2px;">Newark</td>
<td style="text-align: left; width: 84.8px;">Singapore</td>
<td style="text-align: left; width: 83.2px;">Singapore Airlines</td>
<td style="text-align: left; width: 64.8px;">15,344 km</td>
<td style="text-align: left; width: 76px;">18:30-18:45</td>
<td style="text-align: left; width: 60.8px;">A350-900</td>
<td style="text-align: left; width: 53.6px;">Oct 11, 2018</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">2</td>
<td style="text-align: left; width: 95.2px;">Auckland</td>
<td style="text-align: left; width: 84.8px;">Doha</td>
<td style="text-align: left; width: 83.2px;">Qatar Airways</td>
<td style="text-align: left; width: 64.8px;">14,535 km</td>
<td style="text-align: left; width: 76px;">17:40-18:20</td>
<td style="text-align: left; width: 60.8px;">B777-200LR</td>
<td style="text-align: left; width: 53.6px;">Feb 5, 2017</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">3</td>
<td style="text-align: left; width: 95.2px;">Perth</td>
<td style="text-align: left; width: 84.8px;">London-Heathrow</td>
<td style="text-align: left; width: 83.2px;">Qantas</td>
<td style="text-align: left; width: 64.8px;">14,499 km</td>
<td style="text-align: left; width: 76px;">17:25</td>
<td style="text-align: left; width: 60.8px;">B787-9</td>
<td style="text-align: left; width: 53.6px;">Mar 24, 2018</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">4</td>
<td style="text-align: left; width: 95.2px;">Auckland</td>
<td style="text-align: left; width: 84.8px;">Dubai</td>
<td style="text-align: left; width: 83.2px;">Emirates</td>
<td style="text-align: left; width: 64.8px;">14,200 km</td>
<td style="text-align: left; width: 76px;">17:05-17:20</td>
<td style="text-align: left; width: 60.8px;">A380</td>
<td style="text-align: left; width: 53.6px;">Mar 2, 2016</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;"></td>
<td style="text-align: left; width: 95.2px;">Auckland</td>
<td style="text-align: left; width: 84.8px;">Newark</td>
<td style="text-align: left; width: 83.2px;">Air New Zealand</td>
<td style="text-align: left; width: 64.8px;">14,178 km</td>
<td style="text-align: left; width: 76px;">15:40-17:40</td>
<td style="text-align: left; width: 60.8px;">B787-9</td>
<td style="text-align: left; width: 53.6px;">Oct-20</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">5</td>
<td style="text-align: left; width: 95.2px;">Los Angeles</td>
<td style="text-align: left; width: 84.8px;">Singapore</td>
<td style="text-align: left; width: 83.2px;">Singapore Airlines</td>
<td style="text-align: left; width: 64.8px;">14,113 km</td>
<td style="text-align: left; width: 76px;">15:00-17.50</td>
<td style="text-align: left; width: 60.8px;">A350-900</td>
<td style="text-align: left; width: 53.6px;">Nov 2, 2018</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">6</td>
<td style="text-align: left; width: 95.2px;">Houston</td>
<td style="text-align: left; width: 84.8px;">Sydney</td>
<td style="text-align: left; width: 83.2px;">United Airlines</td>
<td style="text-align: left; width: 64.8px;">13,834 km</td>
<td style="text-align: left; width: 76px;">17:30</td>
<td style="text-align: left; width: 60.8px;">B787-9</td>
<td style="text-align: left; width: 53.6px;">Jan 18, 2018</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">7</td>
<td style="text-align: left; width: 95.2px;">Dallas/Fort Worth</td>
<td style="text-align: left; width: 84.8px;">Sydney</td>
<td style="text-align: left; width: 83.2px;">Qantas</td>
<td style="text-align: left; width: 64.8px;">13,804 km</td>
<td style="text-align: left; width: 76px;">16:50-17:05</td>
<td style="text-align: left; width: 60.8px;">A380-800</td>
<td style="text-align: left; width: 53.6px;">Sep 29, 2014</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">8</td>
<td style="text-align: left; width: 95.2px;">New York-JFK</td>
<td style="text-align: left; width: 84.8px;">Manila</td>
<td style="text-align: left; width: 83.2px;">Philippines Airlines</td>
<td style="text-align: left; width: 64.8px;">13,712 km</td>
<td style="text-align: left; width: 76px;">16:30</td>
<td style="text-align: left; width: 60.8px;">A350-900</td>
<td style="text-align: left; width: 53.6px;">Oct 29, 2018</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">9</td>
<td style="text-align: left; width: 95.2px;">San Francisco</td>
<td style="text-align: left; width: 84.8px;">Singapore</td>
<td style="text-align: left; width: 83.2px;">United Airlines/ Singapore Airlines</td>
<td style="text-align: left; width: 64.8px;">13,593 km</td>
<td style="text-align: left; width: 76px;">16:25-17:20/</td>
<td style="text-align: left; width: 60.8px;">B787-9/ A350-900</td>
<td style="text-align: left; width: 53.6px;">Jun 1, 2016/ Oct 23, 2016</td>
</tr>
<tr>
<td style="text-align: left; width: 40.8px;">10</td>
<td style="text-align: left; width: 95.2px;">Johannesburg</td>
<td style="text-align: left; width: 84.8px;">Atlanta</td>
<td style="text-align: left; width: 83.2px;">Delta Air Lines</td>
<td style="text-align: left; width: 64.8px;">13,581 km</td>
<td style="text-align: left; width: 76px;">16:03-16:55</td>
<td style="text-align: left; width: 60.8px;">B777-200LR</td>
<td style="text-align: left; width: 53.6px;">Jun 1, 2009</td>
</tr>
</tbody>
</table>
Source: Forsyth Barr analysis
Andy Bowley Head of Research Forsyth Barr Limited
T:+64 4 495 8246 M:+64 21 338 941 TF:0800 367 227 F:+64 4 495 8193 P:PO Box: 5266, Wellington 6145 W:<a href="https://foundry.smartkarma.com/www.forsythbarr.co.nz" target="_blank" rel="noopener">www.forsythbarr.co.nz</a> Twitter: @forsythbarr

Transport Titbits — New York, New York
Air New Zealand&nbsp;(AIR) is to commence Auckland – New York services from October 2020 and at the same time will exit its Los Angeles – London services. These changes are consistent with its Pacific Rim strategy. The new service will utilise its JV partner United’s hub at Newark Airport, and will be the fifth longest commercial airline route globally. As a result&nbsp;Auckland Airport&nbsp;(AIA) would be party to three of the top five longest routes currently (see chart below).
Ultra long haul flying has been enabled by modern aircraft that are materially more fuel efficient than their predecessors. The configuration of AIR’s new service will be its “Code 2” 275 seats, which has a higher prevalence of business and premium economy seats. This limits the weight, allowing the aircraft to fly further, and increases the yield, ensuring its commercial to do so.
The new service will operate 3x weekly, be operated by a B787-9 with 275 seats, and travel time will be 15hr 40m northbound and 17hr 40m southbound. The benefit to AIR of opening up the east coast of the US is a new demand pool, similar to what it achieved with Houston and Chicago in recent years. Consumer demand increases with direct flights relative to having to connect via other hubs. In light of capacity tweaks across AIR’s network in tandem with the new and exited routes, we expect little impact on total capacity.
Ultra long haul boundaries will continue to be tested. Last week Qantas flew a new B787-9 from New York to Sydney (~16,000km) as a test flight with 10 crew members and 40 passengers. It expects to start commercial services on the route as early as 2023 as part of its Project Sunrise initiative.
On other airline route development news look out for the Qantas/American Airlines announcement due next week on the shape of their combined network as a result of the newly minted JV. There will likely be implications for both AIR and AIA.
Transport Titbits Chart of the Week: Longest passenger airlines routes globally
       


Rank
From&nbsp;
To
Airlines
Distance
Scheduled
Aircraft
First Flight


1
Newark
Singapore
Singapore Airlines
15,344 km
18:30-18:45
A350-900
Oct 11, 2018


2
Auckland
Doha
Qatar Airways
14,535 km
17:40-18:20
B777-200LR
Feb 5, 2017


3
Perth
London-Heathrow
Qantas
14,499 km
17:25
B787-9
Mar 24, 2018


4
Auckland
Dubai
Emirates
14,200 km
17:05-17:20
A380
Mar 2, 2016



Auckland
Newark
Air New Zealand
14,178 km
15:40-17:40
B787-9
Oct-20


5
Los Angeles
Singapore
Singapore Airlines
14,113 km
15:00-17.50
A350-900
Nov 2, 2018


6
Houston
Sydney
United Airlines
13,834 km
17:30
B787-9
Jan 18, 2018


7
Dallas/Fort Worth
Sydney
Qantas
13,804 km
16:50-17:05
A380-800
Sep 29, 2014


8
New York-JFK
Manila
Philippines Airlines
13,712 km
16:30
A350-900
Oct 29, 2018


9
San Francisco
Singapore
United Airlines/ Singapore Airlines
13,593 km
16:25-17:20/
B787-9/ A350-900
Jun 1, 2016/ Oct 23, 2016


10
Johannesburg
Atlanta
Delta Air Lines
13,581 km
16:03-16:55
B777-200LR
Jun 1, 2009



Source: Forsyth Barr analysis
Andy Bowley Head of Research Forsyth Barr Limited
T:+64 4 495 8246 M:+64 21 338 941 TF:0800 367 227 F:+64 4 495 8193 P:PO Box: 5266, Wellington 6145 W:www.forsythbarr.co.nz Twitter: @forsythbarr