Buses, trains cry foul on airfare cuts

By CATHY ARONSON

Bus and train operators are preparing to complain to the Commerce Commission about Air New Zealand's new low domestic prices, which started a price war the operators say they cannot afford.

Since Air NZ announced its fares on Wednesday the long-distance train fares have halved, buses and coaches are considering cutting costs and a rental car company has cut its charges almost 80 per cent.

Tranz Scenic and the Bus and Coach Association have made an unlikely alliance to fight back against the airfares, which will make some destinations cheaper by plane.

Air NZ dropped its price by an average of 28 per cent on main routes like Wellington, to a low of $137 return, cheaper than the Tranz Scenic's new price of $158, almost halved from $290 last week.

The plane trip takes an hour, compared with 9-11 hours by bus or train.

Tranz Scenic approached the commission in June when Air NZ announced it would drop its fares, saying it could be a predatory move.

Tranz Scenic director Don Gibson said Air NZ was using its market dominance, and Government backing, to out-price other forms of transport. If it was unsustainable Air NZ would receive a Government cash injection, a form of subsidy which rail and buses do not get.

Mr Gibson said the commission declined to investigate, saying trains and planes were not competitors.

But Air NZ's managing director, Ralph Norris, said on Wednesday the new prices were "strongly competitive with rail and car travel".

He said the airline's one-way super saver to Wellington, to be taken in off-peak times, was identical to Tranz Scenic's night train for $59.

Mr Gibson said Tranz Scenic could lose about 30 per cent of its train passengers to Wellington. He doubted it could cut prices further.

Bus and coaches were waiting to see if bookings dropped off before cutting prices. It would know soon, as most tourist booked ahead for November.

Bus and Coach Association director John Collyns said if figures were down it wanted the commission to investigate.

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