Air New Zealand 'record-high domestic airfares' called out

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Air NZ says its February domestic fares rose 2 percent year-on-year.
Photo: RNZ / Nate McKinnon

Airports are hitting out at Air New Zealand’s domestic airfares and are calling for ticket prices to be independently monitored.

Stats NZ data showed domestic airfares rose 7.4 percent in February from the month earlier, and increased 7.7 percent from February 2023.

Air New Zealand recently announced it was reviewing fares in response to cost pressures.

NZ Airports Association chief executive Billie Moore said the national carrier was adding to the cost of living for households.

“Air New Zealand has upped its domestic airfares yet again, as well as increasing the cost of add-ons such as bag check by $10. It’s flagged that other costs, like checking in your pet, could also be in for a future price hike,” Moore said.

The airline hit back, saying it was trying to meet costs and disputed some of the claims around fares.

Air NZ general manager of domestic Iain Walker said its February domestic fares rose 2 percent year-on-year.

“[It is] below inflation and the increases we’ve seen in our operating costs,” Walker said.

Therefore, he said, the airline was taking steps to ensure the fares covered the cost of travel.

“It’s also why we – and our competitor airlines – are so concerned about the Auckland Airport redevelopment, which will see charges increase from $9 per domestic passenger today to $46 in 2032,” Walker said.

The association cited numbers from the airfare monitoring system Infare, saying the airline hiked its average one-way domestic fares by 34 percent in the year ended September 2023.

However, Air New Zealand disputed the Infare data, saying it was “incomplete” and did not reflect its pricing, as it did not include online and Grabaseat bookings.

The association said the new Civil Aviation Act 2023 provided the Ministry of Transport with information-gathering power to set up an independent airfare monitoring system.

Moore said while a price monitoring system would not solve the market dominance of Air New Zealand, it could help improve prices.

“What airfare monitoring can do is, first of all, have a bit of chilling effect on this because there can be independent data released on average airfares, that does have a natural effect on airline behaviour,” Moore said.

“It can also help show how the market is performing, potentially for other operators to take a look and see if they see an opportunity.”

The relationship between Air New Zealand and airports, notably Auckland, has turned sour over the past year as Auckland Airport pressed ahead with a $3.9 billion revamp of its terminal.

Auckland Airport’s move to increase airline charges has also not gone down well with Air New Zealand and other airlines.

“Air New Zealand is busy blaming Auckland Airport for cost increases when it’s their own record-high domestic airfares and cost add-ons that are driving up the cost of domestic travel for consumers. Airport charges only make up a fraction of a ticket,” Moore said.

Air New Zealand indicated it would be open to further studies into airfares.

“Our fares are linked to our operating costs. We would support a deeper look into the cost of flying in New Zealand, including the most significant charges that impact airfares – airport charges, along with fuel, air traffic control, and aviation security fees,” a spokesperson said.