Steve Hart: Crash-landing for 'bargain' fares

COMMENT

Air New Zealand's announcement of low fares last week drew a wave of publicity with its one-way tickets to Sydney for $189.

At first sight the Tasman Express service looked like a bargain, but 10 minutes research showed the whole event to be nothing more than a publicity stunt - albeit a perfectly executed one.

The market for one-way travel to Sydney is pretty small - made up of tourists landing in New Zealand before hopping over to Australia and then home again.

To get the full picture we need to double the fare ($378) and add the compulsory taxes. That brings Air New Zealand's bargain to about $510. Well, that really isn't a bargain at all because about six weeks ago Flight Centre was offering return flights to Sydney for $430 including taxes. Other airlines reacted by discounting their fares.

Okay, the fares were discounted only for a short while, but it shows what can be done - and the nature of competition drew the expected response from other airlines.

Air New Zealand says its $189 price is permanent (we'll see), but other airlines are already bettering the offer on price while retaining a full service flight. Thai Airways has pitched in with a $369 Sydney return plus taxes - Qantas has matched that deal. Lan Chile is offering the route for $375.

One difference with the Air NZ package, which is available from October 29, is that it is an internet only offer - book the same return flight with an agent or by phone and you'll pay $50 more. To get Air NZ's low price you need access to the internet and a credit card.

Once you've bought the ticket you can't change your flight - you either use it or lose it. Is that really the way to run a business? What if The Warehouse didn't give customers the opportunity to change their mind? It wouldn't be the large firm it is today - so why should our airline be any different?

We live in times where we are all expected to be a bit more flexible, a little bit more forgiving - so why the draconian restrictions?

Travel on a cheapy with Air NZ and you will also miss out on a standard meal. Travellers on the flight are now offered "cafe style" meals.

Children's meals, special meals and infant supplies are also off the menu. Oh, and you had better take something to read because free magazines and newspapers are also being stopped (unless you travel in the high-price business class). These internet only fares will not earn you Frequent Flyer points either. So how exactly is Air NZ to generate loyalty?

The more one looks at this offer the less attractive it becomes. Yes, the Air New Zealand publicity machine did its job well, the media coverage it gained was extensive - but the bottom line is, it's no bargain.

There are so many downsides to this deal that the only upside is the price, and that advantage is already fading.

I wish I could write about how wonderful the $189 offer is. I wish Air NZ didn't skimp on things such as flexibility, food, newspapers and air points - or compel people to use the internet to get these deals.

And do we really want Air NZ to be a "no frills" airline? If that's what it is becoming, then what of its no-frills subsidiary Freedom Air?

Competition, even if it is luke warm, leads to lower fares. And things will hot up when Virgin Blue enters the market here - probably in December. That will give us even more freedom. But what we still need is someone to offer us an extra direct route to LA to break the Air NZ/Qantas monopoly and get the price down from the exorbitant $1560.