Air New Zealand’s disciplined capacity cuts results in RASK rise

By Andrew Curran

Air New Zealand’s passenger numbers and network-wide capacity are down compared to this time last year. However, the capacity cuts are more than double the decline in passenger traffic. This has helped increase average passenger load factors and, more importantly, deliver the airline a significant boost in revenue per available seat kilometre.

Air New Zealand released its latest quarterly trading update yesterday, October 21, covering the three months to September 30, 2026. The airline said it carried 4.162 million passengers during the period, a 1% decline compared with the same three months last year.

Network-wide available seat kilometres (ASKs) in the July – September 2026 period decreased by 2.6% compared with the same period last year. This was driven by fuel-price-related capacity cuts across the domestic network and a reduction in long-haul flying, primarily on the Auckland (AKL) – Los Angeles (LAX) city-pair.

However, those managed capacity cuts helped lift network-wide load factors from 83% to 84.8% over the 12-month period.

Load factors are not a reliable indicator of profitability because, among other things, an airline can sell every seat on a plane, achieving a 100% load factor, but sell those seats at prices that do not generate a profit.

Revenue per available seat kilometre (RASK) is a better metric, and this improved by 12.7% year-on-year.

“RASK benefited from a combination of capacity management and higher average fares across the network, partially mitigating the impact of significantly higher jet fuel prices,” the update stated.

The airline noted that the Singapore jet fuel price had increased from around USD 85 per barrel in the July - September 2025 period to USD 140 per barrel in the same three months this year.

Trans-Tasman and Southwest Pacific flying performs well for Air New Zealand

Air New Zealand divides its network into three groupings - domestic, short-haul international, which includes trans-Tasman and Southwest Pacific flying, and long-haul international.

Two contrasting stories played out in the three months to September 30. Domestic passenger traffic fell by 2.7% compared with the same period in 2025, while available seat kilometres declined by 2.5%. Long-haul passenger traffic decreased by 2.3%, while available seat kilometres contracted by 5.4%.

In both cases, capacity cuts exceeded the decline in passenger traffic, resulting in higher average load factors - up 1.5 percentage points across Air New Zealand’s domestic network and 2.8 percentage points across its international network. Air New Zealand serves 20 domestic airports and 13 long-haul destinations.

In contrast, passenger traffic across the airline’s trans-Tasman and Southwest Pacific network increased by 3.7% in the July – September period compared with the same three months last year. Available seat kilometres rose by 4.2%. Load factors remained flat at 85.5% but RASK rose 4.2%.

“The ASK increase was driven primarily by increased widebody flying, with B777 and B787 capacity up 11.6% on a normalised basis, particularly on Auckland to Perth (PER) and Auckland to Papeete (PPT),” the update noted. “Additionally, new services on Christchurch (CHC) to Rarotonga (RAR) and Queenstown (ZQN) to Brisbane (BNE) contributed approximately 2.3 percentage points of growth.”

This year, under relatively new chief executive Nikhil Ravishankar, Air New Zealand has responded assertively to rising operating costs and a lukewarm New Zealand economy by trimming capacity and pursuing internal efficiencies. The most visible schedule cuts have occurred on high-frequency domestic routes, mostly during off-peak periods.

Additionally, although Air New Zealand said it would quarantine its North American flights when it first announced capacity cuts earlier this year, departures to Los Angeles fell from 246 in the July – September 2025 period to 204 in July – September 2026, a decline of 17%. The airline also replaced its B777-300ERs on some LAX services with smaller B787-9s.

Air New Zealand adding new routes and more flights to China this summer

However, 2026 has not been all about downsizing. In May, Air New Zealand announced it would return widebody flights to Christchurch and launch services from the city to Singapore (SIN), starting October 28; Tokyo Narita (NRT), starting November 28; and Perth (PER), starting November 30.

Next week, the airline will begin operating three flights per week between Auckland and Western Sydney (WSI). Over the upcoming 2026/27 Southern Summer season, it will also increase Auckland – Shanghai (PVG) flights to cater for passengers travelling during the Chinese New Year period.

Air New Zealand’s Auckland hub is expecting to process more than six million passengers this summer, up 5% on last summer, with much of the growth attributed to services to and from China.

Air New Zealand’s contribution to that growth will be an additional 7,000 seats on its flights to and from Shanghai.

“We’re being deliberate about where we add capacity,” Air New Zealand Chief Commercial Officer Scott Wilkinson said last month. “Shanghai at this time of year is a fantastic opportunity.”

Air New Zealand also noted that its on-time arrival and reliability performance had improved this year. In the three months to September 30, 2026, its aircraft arrived on time 85.2% of the time, up 7.2% on the same period in 2025. Controllable cancellations also declined by 1%.

On-time arrivals are defined as an aircraft arriving within 15 minutes of its scheduled arrival time.

The airline said there was no single solution behind the improvement. Instead, it attributed the results to disciplined execution and attention to detail.

Photo: Aero South Pacific.
Contact the writer: andrew@aerosouthpacific.com