Frill-free Air NZ slashes its fares

By CATHY ARONSON transport reporter

Air New Zealand will today announce new no-frills domestic fares expected to cut ticket prices by 30 per cent.

They will take effect when the airline's one-class domestic service, Air NZ Express, starts in October.

Express will replace the airline's business and economy class, increasing the number of seats on each aircraft.

Full meals and drink selections will be replaced with a snack, tea, coffee and water.

The fares could go as low as Freedom Air's, Air NZ's budget subsidiary, which will stop flying the domestic market when Express starts.

The cost of flying from Auckland to Wellington and back will fall from $570 to an expected $399.

Insiders say the airline could seek to match low fares on popular routes such as Auckland to Wellington.

The lowest return fares on this route are Freedom's $197.60 or Qantas' $197.57, both available only through the internet.

Some of the present low fares come with conditions, including booking through the internet, staying overnight and early booking.

Air New Zealand is under pressure from Qantas.

The Australian airline, which wants to buy a 25 per cent stake in Air New Zealand, this week said it would increase the number of flights to Sydney from Auckland and Christchurch by 39 to 58 each week from October.

It is also putting more planes on its domestic routes.

Air New Zealand's ticketing plans have run into trouble with travel agents.

Because the tickets are expected to have fewer conditions, including restrictions on stopovers, booking times and return tickets, it will be easier for customers to book online, eliminating the need for the airline to pay travel agents' commission.

Agents say they book 60 per cent of domestic flights.

Some have stopped promoting flights with Air NZ, and the country's biggest agency, Flight Centre, has threatened to withdraw its $205 million of global business a year.

The Travel Agents Association will today announce a campaign against the airline's decision to axe its 4 per cent commission.

The association and Air NZ have not reached an agreement, but the airline is due to announce new incentive schemes, such as bonuses for target sales, this week.

Air NZ is not confirming travel agents' and aviation analysts' belief that the fares will be reduced by up to 30 per cent.

Flight Centre marketing manager David Burns said the domestic market needed competition to keep prices down and travel agents happy.

"If they tried to do this internationally, we'd say, 'OK, that's fine, we won't sell you, there is choice'.

"So they are never going to do that. But they are in a monopoly position domestically."

Air NZ spokesman Mark Champion said the airline wanted to make it easier for people to fly cheaply.

Qantas has told travel agents it will continue to pay commission for domestic travel.

It will also retain its business class seats.

It is increasing its domestic capacity and frequency by adding three Boeing 737s-300 to the four it flies between Auckland, Wellington and Christchurch.

It has a code-share agreement with Origin Pacific to fly to regional centres.

Origin, based in Nelson, has increased its fleet to 15 turboprop aircraft by leasing two new 64-seat ATR-72 planes.

nzherald.co.nz/travel