Just how bad is Air New Zealand's long haul aircraft shortage?
Air New Zealand have had a torrid time of late. With rumours abound of them returning to London, CEO Greg Foran has simultaneously confirmed their interest while pouring cold water on the prospect of them doing so anytime soon. They barely have sufficient long haul aircraft to fulfil their contemporary schedule, nevermind starting new routes!
Just this week NZ announced the cancellation of seasonal flights to Seoul citing “ongoing engine availability challenges across its fleet”. So what’s going on with NZ? Why are NZ struggling to maintain their schedule and why do they have such an acute fleet shortage?
Is this all self-inflicted?
NZ has faced a perfect storm undermining their ability to maintain long haul capacity. NZ have emphasised exogenous engine issues that have undermined the reliability of both the short and long haul fleet.
The A320neo and A321neo has been undermined by well-known Pratt & Whitney challenges, while the B787 fleet has suffered from similar challenges with their Rolls-Royce engines. The former also undermines the latter as lost A320neo and A321neo capacity on trans Tasman routes to/from Australia have required backfilling by more B787 and B777 flying across the ditch. While the engine challenges are real we argue that a larger part of their shortage is self inflicted!
Firstly, NZ chose to accelerate the retirement of their B777-200ER fleet in 2020 (8 aircraft). These were originally due for retirement from 2022, coinciding with the delivery of 8x B787-10 that were ordered in May 2019 (order included options for an additional 12x B787-9/10).
In June 2021, the order was renegotiated, deferring 1st deliveries to 2024 and adjusting the mix to 5x B787-9 and 3x B787-10. These have been delayed further as a result of Boeing’s challenges rather than further deferrals by NZ. NZ now expects the 1st deliveries from the 2nd half of 2025.
As reported in their 2024 Annual Results, NZ now expects delivery as follows (compared to 2024 Interim Results):
FY26: 2 aircraft (previously 4)
FY27: 3 aircraft (previously 2)
FY28: 1 aircraft (previously 2)
FY29: 2 aircraft
To some extent NZ took a significant risk with the early retirement of the B777-200ER fleet and simultaneously deferring deliveries of replacement aircraft. This is more obtuse as the B787 engine issues were already known at this time. This is evidenced by NZ having already taken on short term leases of 3 aircraft in 2018 and 2019 (1x B777-300ER and 2x B777-200ER)!
This has been further exacerbated by the decision to begin cabin refits on the B787 fleet. The 1st aircraft ferried to Singapore in October 2024 and will be out of service for several months with an expected return to service in early 2025. The cabin refit programme will reduce the operational B787 fleet by at least 1 aircraft for the next three years as the fleet rotate through.
In their defence
Uncertainty in the return of demand for international travel after the COVID-19 pandemic was far more debilitating for airlines than most readers appreciate. This was especially the case in Australia and New Zealand due to aggressive approaches their governments took to border closures.
We have defended Qantas’s decisions to delay the return to service of their A380 fleet as well as their decision to accelerate the retirement of the remaining B747-400 fleet, the early retirement of 2x A380 aircraft, and the conversion of 2x A330-200 to freighters.
However, the scale is simply not comparable asprior to the pandemic NZ had a fleet of 29x widebody aircraft. NZ retired 28% of their fleet all while experiencing significant reliability challenges that had already required them to take on short term leases. By comparison, Qantas’s had a much larger widebody passenger fleet (56 aircraft) and retired just 16%. Notably, the remaining B747-400s were due for retirement within the next year anyway and have since been replaced (by 3x B787-9 and 2x wetleased A330s) resulting in a net fleet reduction of 7%.
Qantas have also backfilled capacity through Jetstar, meaning that seat capacity has normalised at a group level. In fact, data for the full year show that Qantas group delivered 2.8% more international ASKs in 2024 compared to 2019.
So just how bad is it?
We love our empirical data analysis and this topic is no exception. Utilising ADS-B data, we’ve built a time series of NZ’s widebody fleet availability. The data reflects whether each aircraft was available for the majority of each month between January 2018 and 2025, broken down by fleet type (including B77W, B772, B789 and wet-leased A332s). Aircraft are counted as unavailable when in storage or heavy maintenance, and available when flying.
Between 28 and 29 aircraft were available during most months in late 2018 and most of 2019. The data clearly show the decline in the fleet coinciding with the retirement of the B777-200ERs in early 2020s. Fleet availability has remained relatively consistent since between 20 and 21 aircraft in most months.
Since early 2024, availability of the B787-9 fleet has plummeted as aircraft have been temporarily stored awaiting engine changes and/or receiving cabin refurbishments. However, the acquisition of additional B777-300ERs has made up for the temporary loss of aircraft but is only maintaining the fleet level at post-pandemic levels rather than returning to the pre-pandemic baseline.
What has the been the impact
Aircraft shortages have significantly hamstrung NZ. Nevermind London, they have cancelled the planned new route to Chicago and scaled back their new flagship New York service.
In December we saw further service reductions to Asia announced, from a combined 24 to 21 weekly flights during NS25 season, and reductions to North America in NS25 from 24 to 18 to 19 weekly flights. This was before the previously mentioned cancellation of seasonal services to Seoul.
This follows similar reductions implemented during NW24/25, and previously in NS24, highlighting the systematic challenges. It isn’t just a capacity shortage, but the forward looking instability. Clearly, the recovery in fleet capacity has systematically fallen short of targets.
This is the result of a perfect storm! Engine challenges and delivery delays ion the B787 fleet were exogenous, however the engine challenges are long standing and are something that could have been planned for. It seems particularly obtuse to choose to start a refurbishment process of the B787s in light of the shortfall, however one might consider that the impact of this is limited, with just one aircraft at a time.
Largely ignored in analysis is the early retirement of the B777-200ERs. While the post-pandemic uncertainty presented capacity risks, there appeared to be no contingency plan in place given the known challenges with the B787 fleet. However, there is an elephant in the room that we haven’t mentioned yet: D-checks!
The original withdrawal timeline of the B777-200ERs were timed to coincide with their 3rd D-checks, thus continuing to operate them would’ve committed to flying them for several more years. This wouldn’t have been without cost, but in hindsight this may have been a cost worth taking!
Thanks for reading and remember to subscribe and share!