High Airfares Hurting Tourism

Published 5 Feb 2015 

Good news for some travellers now that Air New Zealand $29 Night rider fares are to be reintroduced and even extended to some provincial regions. Unfortunately it seems Hawke’s Bay is not included. This region always seems to miss out on meaningful improvements to air services and reductions in airfares. Airfares here are excessive and typically it is cheaper to fly over 1000Km to Dunedin and Queenstown than the just over 300Km from Auckland to Hawke’s Bay. 

Over the holiday period I endured the inconvenience of this issue first hand and I suspect this experience is fairly typical. I received about a months warning of visitors planning to arrive in Auckland from the UK, with a request that I arrange connecting domestic travel. The plan was to use Hawke’s Bay as a base to explore other parts of the North Island, but the only suitable flight to Hawke's Bay was to cost an outrageous  $269 one way, each. Palmerston North and Wanganui were no better, but Wellington was only $79 ( $45 with Jetstar) and Rotorua $89. Interestingly Christchurch was only $179, and Dunedin $169.  

So rather than travelling direct to Hawke’s Bay the visitors chose to instead start in Rotorua. The problem was repeated when trying to arrange return flights, and with fares still in excess of $200 they further reduced their stay in Hawke’s Bay and decided again to use Rotorua as a base. Just how much Hawke’s Bay missed out on is uncertain, but they were spending up to $1000 a day, suggesting a significant loss to this area.

This of course is just a continuation of Air New Zealand’s exploitation of Hawke’s Bay. It’s normal behaviour for monopolies to exploit a lack of competition but that does not make it right. The airline can continue these practices only because Hawke’s Bay’s leaders appear disinterested  in stopping this outrageous situation. Perhaps this is because their own travel is being paid for by taxpayers and ratepayers, or perhaps there are other motives such as the possibility of a seat on the airline’s board. 

Government, and not just the present administration also seems totally disinterested, despite owning over half the airline shares. Perhaps this easy money makes doing nothing more appealing than taking action. Strange because competition has been forced on many areas in the economy including electricity, telecommunications, and education just to name a few. All we are told in the interests of a better performing  economy.

It is about time the NZ Commerce Commission also showed some gumption and used their initiative to investigate this clear example of monopoly manipulation, instead of just coat tailing other regulators. This unimaginative copying happened again this week when they suddenly decided to look into Air NZ’s “drip pricing” practices. The fact the ACCC (Australia) had already started looking into these same practices  in their country shows our ComCom lacks either the knowledge or willingness necessary to stamp out uncompetitive actions in the transport sector. The same happened a few years ago when they discovered easy pickings by following the actions of overseas regulators over air freight charges.

For years Air New Zealand have been blaming high high regional airfares on high fuel prices including claims that jetfuel makes up a third of the airlines costs. Well perhaps they have not noticed the price of crude oil has halved in recent months and one assumes aviation fuel has fallen steeply inline with petrol and diesel. If the airline has got its hedging arrangements wrong this should not be a burden on travellers. The  Commission might like to start by forcing the airline to pass on reductions in jet fuel prices in the same way they forced down the price of  copper based broadband.   

We need to get it into our heads that Hawke’s Bay is highly dependant on air travel because of our relative remoteness. The few bogus experts that always seem to emerge when the subject arises need to be ignored. They clearly lack expertise on the subject are are simply condoning unconscionable  behaviour. 

With the endless regurgitation of statistics confirming our poor economic performance, we should start by looking at the unnecessary barrier being created by high airfares. Surely reducing airfares is one of the easiest ways to make Hawke’s Bay more attractive to visitors and business, and as a place to live.