The US economy is showing good signs of recovery. Consumer
confidence is rebounding and other indicators are returning to
positive territory, though unemployment is still a concern.
Travel sellers and airlines are cautious about the next three
months (May, June and July), with limited airline seat
availability, heavy competition from Australia, and a natural dip
in demand over the New Zealand winter.
Jump to section:
Economy
Outbound Travel
Airline Update
Competitor Activity
Economy
The US economy is showing good signs of recovery, with a return
to growth signalling the end to the country's sharpest contraction
since the Great Depression. Consumer confidence is rebounding, the
stock market is performing strongly and house sales are up.
March 2010 was the first month since November 2007 in which
employment rose by more than 100,000. Unemployment was sitting at
9.7 per cent in March, dropping from 10 per cent (15.7 million
Americans) in December 2009. However, unemployment levels remain a
concern.
Growing consumer optimism was reflected in retails sales for
March, which, when compared to March 2009, showed the biggest
increase in more than 10 years.
GDP grew by 5.6 per cent in the first quarter of 2010, and the
Economist Intelligence Unit forecasts growth of 3.1 per cent
overall for 2010, driven in part by massive fiscal and monetary
stimuli.
While economic indicators are going in the right direction,
commentators remain cautious and warn the recovery will take
time.
Key Indicators
Sources:
www.economist.com (GDP Growth)
www.xe.com (Exchange rates)
| Exchange Rate vs NZD |
USD1 = NZD1.39 (10 May 10) |
| Expected GDP Growth |
+3.1% for 2010
+2.9% for 2011
(Apr 10 est.)
|
Outbound
Travel
The year started well for travel to New Zealand with affordable
airfares and restrained recovery in consumer confidence helping a
slight boost in visitor arrivals in January (up 0.2 per cent).
Arrivals fell slightly in February (down 1.0 per cent) and more
steeply in March (down 5.6 per cent) and April (down 14.6 per
cent).
Travel sellers are cautious about the coming quarter
(May/June/July), due to limited availability of airline seats and
fierce competition from Australia. New Zealand will also see a
natural seasonal dip in arrivals over the shoulder and off-peak
months.
Booking lead times remain late and consumers are still looking
for last-minute deals. Low airfares to many destinations are
driving online sales of airline tickets, and travellers are either
going online to book activities, accommodation and other ground
arrangements, or seeking agents to help them. Regardless of what
and how they book, bookings continue to be driven by deals.
The
cruise industry is expecting a bumper 2010/11 season, with good
levels of forward bookings reported. We could see an increase of as
much as 25 per cent in passenger numbers compared to the 2009/10
season, with around 132,000 passengers expected next season.
Americans make up a third of all cruise visitors to New
Zealand.
Airline
Update
With around 26 flights a week, the US has more direct air links
with New Zealand than any other long-haul market.
In May 2010, Air New Zealand said it will increase seat capacity
by almost 18 per cent out of San Francisco and 4 per cent out of
Los Angeles over the upcoming Northern winter (November 2010 -
March 2011). The extra capacity is being added as the airline
starts to see a recovery in air travel following the 2009
slump.
A code share agreement between Air New Zealand and Continental
Airlines announced in early April 2010 will make travel easier for
Americans travelling from Houston, New York and Cleveland. The
airlines are code sharing on more than 540 flights per week to and
from these hubs, connecting to Air New Zealand services to and from
Los Angeles and San Francisco to Auckland.
Overall airfares in March were about USD200 less than in
February (for a one-month advance purchase). Both Air New Zealand
and Qantas were offering deals for travel in May USD798 plus tax
for a round trip.
Tourism New Zealand launched a new campaign with Qantas Airways
and wholesale partner Downunder Answer in April to drive travel to
New Zealand during April to June and in August.
Qantas will start flying daily from Los Angeles to Auckland from
early July 2010, but there will be little change in seat numbers
overall.
Competitor
Activity
With increased air capacity to Australia and exceptionally good
airfares on that route, Australia remains very popular with
American travellers. This is having a negative impact on travel to
New Zealand as consumers seek Australia-only holidays or touch down
in New Zealand just as a stopover. This trend will put further
pressure on New Zealand to compete on price.