Air NZ cranks up local fares

By JOSIE CLARKE

Economy airfares for New Zealand domestic passengers are on the rise again while the cost of flying within Australia plummets.

Air New Zealand is scrapping its super-thrifty one-way fares from the end of the month. The decision comes days after the airline increased its full economy fares 7 per cent.

The cheapest Auckland-Wellington ticket will increase from $181 to $249. An Auckland-Dunedin trip will rise from $282 to $388, and Wellington-Christchurch from $137 to $188, rises of more than 37 per cent.

Air New Zealand spokesman Cameron Hill said the cost of return super-thrifty fares had dropped 12 per cent since the beginning of this month, and were still available with advance purchase and minimum stay conditions.

The airline had also kept its Gotta Go and 21-day-in-advance deals.

"The one-way super-thrifty is just one fare out of a huge range of fares that we offer, and we've made a business decision to remove it."

Rising fuel costs and the low value of the New Zealand dollar had contributed to the fare increases, he said.

The New Zealand situation is the opposite to that in Australia, where Qantas and Ansett have stripped conditions from their cheap advance-purchase fares in response to a widening airfare war.

The spur to cheap flights has been the arrival of Impulse Airlines, a no-frills service offering fares at least 50 per cent cheaper than Qantas and Ansett for flights between the main centres.

Throughout this month, Impulse is undercutting its competitors by 55 per cent with $A149 ($192) fares between Sydney and Brisbane and $A250 fares between Melbourne and Sydney.

And last Thursday, British entrepreneur Sir Richard Branson's Virgin Blue airline started domestic Australian flights with fares less than half those of Ansett and Qantas.

But Mr Hill said the highly competitive Australian market was unsustainable.

"People are introducing fares in Australia that are utterly uneconomic. They can't last."

Qantas New Zealand executives are expected to meet this week to discuss fare structures.

This follows what the airline calls "extreme pressure" from rising fuel prices and the falling New Zealand dollar.