Qantas fare cuts go one better

By MATHEW DEARNALEY

Qantas hit back yesterday in a fare war with Air New Zealand, announcing it would match the local carrier's cheap prices on domestic routes while not skimping on meals for now.

The Australian airline announced a fare schedule matching Air New Zealand's cheapest fares dollar-for-dollar on flights from November 1, but it did not indicate how many seats would be available under these deals.

It said fares would be available between Auckland and Wellington for $59 excluding $9.80c in insurance and other levies payable by passengers on both airlines, and for $69 to Christchurch.

The cheapest fare now available to Wellington is $89 before levies, with most Qantas passengers flying at short notice having to pay $275 in economy-class.

Although the cheapest fares from Auckland to Wellington and Christchurch are available only through the internet, the Travel Agents Association has welcomed an indication from Qantas that agents with an approved booking "engine" will receive commissions for selling these.

The association is furious that Air New Zealand is charging passengers an extra $10 for each domestic flight sector if they do not book their own trips on the internet, but association president James Langton said the Qantas fares announcement was great news for the public.

An announced $79 fare to Dunedin on Qantas is also the same as Air New Zealand's cheapest deal, although internet search by the Herald last night for flights on a sample date of November 20 found the cheapest Qantas fare to be $119 before levies are added.

A Qantas spokesman in Sydney, Simon Rushton, suggested this might be because code-share partner Origin Pacific had yet to load the new price structure into the joint booking system and advised travellers to keep an eye on fare movements.

Qantas now flies only between Auckland, Wellington and Christchurch, meaning passengers make connections with Origin's smaller aircraft for services to Dunedin and elsewhere.

The Qantas webpage showed four flights leaving Auckland for Wellington from mid-morning on November 20 with seats available for the new low price.

Seats on a flight leaving at 6.40am were priced at $119, the same as its quoted Dunedin fare.

Mr Rushton said Qantas hoped to add three more Boeing 737s to its existing four-strong fleet by the end of the year, and disclosed that the airline was considering "potential new routes outside the main routes."

But he said decisions were still some way off.

Although meals would remain on all Qantas flights "for the foreseeable future", Mr Rushton indicated that his airline might not be able to feed passengers indefinitely.

"It is something we'll be reviewing," he said, when asked how sustainable it would be to feed $59 passengers hot meals morning and night, and a cold lunchbox at noon.

Air New Zealand is stripping meals from its new Express domestic service, and passengers on its lowest "Smart saver" fares will not earn air points, even though Qantas will continue to offer these to all passengers.

The Qantas move was seen as a deliberate attempt to upstage Air New Zealand's announcement yesterday of a revised airpoints system, under which it says 83 per cent of its customers will receive benefits.

Air New Zealand chief operating officer Andrew Miller said his airline had made a considered decision to strip down its fares to offer passengers real savings and would not be goaded by Qantas into a rethink.

But he said most passengers on fares qualifying for airpoints would need to take fewer flights to accrue enough for a bonus trip, and the airline was setting aside an average of 15 per cent of all seats across its network for people cashing in points.

He said his airline's reward system was still better than the Qantas one, in awarding points according to kilometres flown, rather than miles.

Passengers flying to London will be the only international travellers having to gather more airpoints for a bonus trip. Even then, Air New Zealand says some may gain under a new provision to give them free domestic connecting flights to this country's international airports.

A senior consultant with the Sydney-based Centre for Asia-Pacific Aviation, Ian Thomas, said the Qantas fare announcement was certainly good news for travellers but questioned how long both airlines could sustain the low prices.

He said Qantas had a much larger domestic home-base from which to "cross-subsidise" fares into the New Zealand market, but such low prices could prove destructive.

Engineering, Printing and Manufacturing Union secretary Andrew Little said the Qantas move confirmed his fear of fierce competition at the possible cost of mass layoffs at Air New Zealand unless the two airlines formed an equity partnership.