Air NZ hikes local flight extras
Beer is flat but craft brews are fizzing Bag charges nabbed the world’s airlines an estimated $32.4b in revenue last year
Air New Zealand is hiking charges by up to 50 per cent for extras on its domestic flights. The airline from today will increase seat-plus-bag fares from $10 to $15. Flexi Time add-on fares will increase from $30 to $35 and Flexi Plus will rise from $50 to $55.
“We review and adjust pricing on a regular basis and this change is part of that process,” a spokeswoman said.
Seat-only fares are not affected by the “buy up” changes that have been announced to the travel industry.
Airlines around the world are making billions of dollars out of ancillary revenue with bag charges yielding an estimated US$23.6 billion ($32.4b) in the past year.
Last week Air New Zealand announced it was on track for its second-highest full-year profit.
Pretax earnings fell to $323 million in the six months ended December 31 from $349m in the same period a year earlier but it raised its dividend to 11c, a 10 per cent increase on the prior period and a record interim payout.
Passenger revenue reached an alltime record for an interim result, at $2.3b. The airline continues to perform strongly in the domestic market — where the new charges apply — carrying about 80 per cent of travellers. It will increase capacity in the domestic market by 6 per cent in the current half year.
Seat-plus-bag fares on Air NZ allow one checked-in bag up to 23kg. On Jetstar a seat plus a 20kg bag is $11. Air New Zealand’s Flexi Time fares allow a bag and a change of flight time on the day without charge. Flexi Plus allows a change of the day of the flight, time, destination or origin, depending on availability. House of Travel commercial director Brent Thomas didn’t think the extra charges for bags would deter passengers from travelling. The airline faced higher fuel charges and this was one way of recovering the extra cost of carrying bags, he said. He advised travellers to be wary of trying to save by not checking in bags and packing more into hand luggage. There has been a crackdown on overweight hand lug- gage at the airport and passengers end up paying much more if they had to check it in.
IdeaWorksCompany, a consultancy on airline ancillary revenues, and CarTrawler estimated airline total ancillary revenue at US$57b worldwide for 2017. Eight years ago this was $14b. “The huge increase of 308 per cent for a la carte revenue since 2010 offers testimony to the growing popularity of the low-cost airline model and the a la carte approach to pricing,” said CarTrawler’s Aileen McCormack.
“Be it global network airlines like Emirates in the Middle East, ancillary revenue champions such as AirAsia and Ryanair, and even traditional airlines like TAP Portugal, all are becoming better retailers to encourage consumer spending.”
New Zealanders’ taste for craft beers continues to grow, with the volume of high-strength beer consumed up 34 per cent last year.
Data from Statistics New Zealand showed the total volume of beer available for consumption had dropped by 1.2 per cent in the 2017 calendar year, but beer with an alcohol content above 5 per cent, incorporating most craft brews, had increased by 33.6 per cent.
“The volume of beer above 5 per cent alcohol rose for the fourth year in a row in 2017,” international statistics manager Tehseen Islam said.
“The volume of high-strength beer available is now over twice the 2013 volume, and three times the 2011 volume, in part reflecting the rising popularity of craft beers.”
Jos Ruffell, co-founder of craft brewery Garage Project, said the rise in craft was a shift away from quantity, and a result of consumers’ changing taste palates.
“We’re seeing people wanting to try new beers but maybe not chasing quantity as they previously might have, so instead of buying a dozen or a big box of beer, they’re going for smaller amounts of variety and interesting beers they can share with friends,” Ruffell said.
“Many of those might be much higher or much lower in alcohol but are more about the flavour.”
Ruffell said although total consumption was down slightly, the craft category was still growing significantly.
The craft market was also more accessible he said, with a premium bottle of beer costing about $12 to $15 compared with a premium bottle of wine that would cost a lot more.
Meanwhile, the total volume of alcohol in alcoholic beverages available for consumption — the number of standard drinks available per person a day — fell in 2017 to the thirdlowest level in the last 17 years.
“In 2010, the average adult would have had about 800 standard drinks available to consume. By 2017, that was down to about 730 a year,” Islam said.
Beer with an alcohol content from 4.35 per cent to 5 per cent also increased, up 4 per cent on the previous year. In contrast, traditional midstrength and lower-strength beer volumes both fell.
Total volume of wine and spirits, including RTDs, available rose 1.5 per cent and 5.4 per cent respectively.