Domestic air travellers subsidise rest of Air NZ

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

Air New Zealand is a monopoly with more than 80 percent of the domestic market. A survey this week found that the domestic airfare market was seen by consumers as the least competitive market in New Zealand.

Air New Zealand hiked the average domestic network airfares by $51 to $200 per one-way airfare for the year ended September 2023 — a 34 percent increase on the previous year.

A further increase is to be announced today (April 22), with indications it will be 30 percent, based on the report of an increase of 30 percent in their costs.

Air New Zealand faces severe competition on the international routes, with only limited competition on several domestic routes. Domestic passengers are effectively subsidising losses incurred on international routes.

There appears to be no control over their prices by the government that is a 51% owner of Air New Zealand, or entities such as the Commerce Commission.

When I reviewed the cost of air travel on April 21, the price for the early 6.15am flight from Gisborne to Auckland was $163, and the Auckland to Gisborne 7.15pm flight had a cost of $187 per flight. The prices on 19 April were considerably lower. The return flight would therefore cost $350 for each passenger. This is before the increases to be announced on April 22, which if they are 30 percent will increase return airfares to about $455 per passenger.

The domestic traveller is being faced with massive increases in airfares with no realistic alternative travel options.

The domestic traveller is subsidising the lower profit or losses being incurred by Air New Zealand on international routes.

Combined with the cost-of-living crisis, and the effects of Cyclone Gabrielle, Gisborne is severely affected due to its relative isolation and relatively low socio-economic community.

We need real competition or a government that is going to address the gouging of domestic consumers by the monopolistic practices of our airline.

Russell Snow