19 June 2010

Cook Strait Air Fare Wars Again

Air New Zealand has turned up the heat on Cook Strait again. They often get hammered for knocking out the competition, somewhat unfairly I think. Empty seats lose money as many an airline in NZ knows. This recession has hammered the provinces really hard and from what I have heard there are a lot of empty seats to the regions. I also suspect a lot of people are driving to major airports to get one of the super cheap fares. Soundsair have done well developing into Nelson over the last few years. I've used them a couple of times and they are great. Lets hope there is room for two operators.

Air New Zealand is opening up more cheap seats on its Nelson-Wellington and Nelson-Auckland routes, and is wagering $20,000 that customers will rush to get on board. t says that if its plan doesn't produce a 40 per cent drop in customers paying top fares out of Nelson within six months, it will donate $20,000 to Nelson Mayor Kerry Marshall's preferred charity. The national carrier, harshly criticised in March for its fare structure, by which a 35-minute one-way trip from Nelson to Wellington can cost $238, has advised customers by email that it is responding to the call for more value for money and concerns about the cost of last-minute fares. Air NZ group general manager of shorthaul airlines, Bruce Parton, said today the change had been brought in on May 10 and early indications were that it was reaching the 40 per cent target. He said the $20,000 was the airline "putting its money where its mouth is". "We just figured it was a way of saying `look, we are serious, we did listen to you, we are serious about it, we're not trying to pull the wool over anyone's eyes'." While the airline's figures were commercially sensitive, it had no problem with showing the mayor, he said. "What people from Nelson will experience is fewer people buying the very top end fares, especially at the last minute, and fuller planes. Far more people will be able to buy cheaper fares at the last minute." Similar changes and some other initiatives were planned for travel from other regional centres. Mr Parton said that Air NZ was also going to add more flights to and from Nelson in September or October, with details still being worked out. It had been trialling a new pricing strategy between Nelson and Christchurch for the past 12 months. It had reduced the number of customers paying higher fares on that route by 40 per cent. "It sounds like they're desperate," said Sounds Air managing director Andrew Crawford. Sounds Air had 25 Nelson-Wellington flights a week and the ticket price of $100 was the same if the seat was booked "one hour, one day, one week, one month or one year in advance", he said. He hoped his customers would be loyal in the face of the new offer, because if Air NZ kept reducing fares, Sounds Air would eventually be unable to compete. "You know what will happen then [to Air NZ fares]," Mr Crawford said. Mr Marshall said this morning that apart from the email, he had not yet heard from Air NZ, but he welcomed the news. It followed a recent public roadshow at which the airline was questioned about its fares and near-monopoly in the Nelson market, he said. “My general feeling is that Air NZ has listened and put some energy into trying to make sure people understand they are trying hard to make sure people get a good deal and, secondly, that it's not as bad as everybody thinks." He said Air NZ's two "dramatic" new investments in Nelson – a $12 million hangar nearing completion and the plan to maintain Mt Cook Airline's ATR72 fleet here, bringing 30 engineering jobs – showed good faith and said great things about Nelson. If he did end up with the $20,000, he would go through a "very robust process" to decide which charity got it. "There are lots of worthy causes, and things are pretty tough at the moment," Mr Marshall added. Nelson MP Nick Smith also applauded the move. Dr Smith, who complained about the high fares in March, said there was a lot to be proud of about Air New Zealand, which had "really pulled its socks up" over the past decade. "My concern has been from constituents about the quite high price of airfares out of Nelson and a perception that they have been pricing their domestic services very highly while at the same time struggling to make a profit in their international services."


Air NZ Nelson-Wellington – $79-$238 one way
Air NZ Nelson-Auckland – $99-$371 one way
Sounds Air Nelson-Wellington – $100 one way.

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