Air Travel Is Highly Competitive and Commoditized, and Air New Zealand Lacks an Economic Moat

Despite roaring back to profitability once the skies reopened following the covid-19 pandemic, competition is weighing on earnings at Air New Zealand. Pent-up demand is largely exhausted, capacity constraints have eased, and competition is back. As global carrier capacity continues to recover, pricing is under pressure. Switching costs among airlines are negligible and consumers aren't loyal. As carriers increase capacity globally, pricing declines, underpinning our view that airlines, including Air New Zealand, lack economic moats.