Time to probe NZ airline behaviour

Asurvey showing that New Zealanders regard the domestic airfare market as the least competitive is concerning to flyers but not surprising. The Horizon Research poll of 1020 adults found that 75 per cent of respondents considered the domestic aviation market — overwhelmingly dominated by Air New Zealand — to be the least competitive, behind the usual targets: supermarkets, banks, and petrol companies. Where there is more airline competition — on international routes — respondents put it as the fifth most competitive of the 12 sectors surveyed.

Air New Zealand has over 80 per cent of the market and is pushing up domestic fares. It says it needs to cover soaring costs and the move comes at a time when its financial outlook is darkening.

The airline is 52 per cent owned by taxpayers, who acted as a financial backstop during Covid19 when the airline was rightly deemed too important to the national interest to fail. The airline is up there with banks in enjoying the rare comfort of knowing this will be the case again if another existential crisis emerges.

Now passengers face higher domestic charges when the airline’s reliability is sliding. Its own figures show that in the first three months of the year, the on-time performance (OTP) for its domestic jet fleet slid from 88.3 per cent to 77 per cent of flights arriving within 15 minutes of the scheduled time, as engine maintenance issues worsened. Overall airline performance at 77 per cent is falling short of its internal goal of 83 per cent.

The OTP figures are released quarterly on its own website. Unlike other countries, government departments or agencies don’t collect or publish comprehensive data on airline performance.

Not only is there a dearth of official data in this country but there is also relatively weak protection for passengers.

Last week, the United States brought in measures to better protect passengers, including instant cash refunds for disrupted flights and an end to “junk fees” — hidden additional charges. During the pandemic, Air New Zealand was forced to refund tickets sold in the US or for travel through the country because of stricter laws than here, which allowed the airline to issue credits.

Consumer NZ says passengers also have better protection in Europe and it has been campaigning for the same in this country for many years. It says airlines should have to set levels of compensation for cancellations and delays of more than three hours that are caused by something within the airline’s control. It also wants set levels of help for a delay caused by something outside the airline’s control.

Consumer NZ wants a comprehensive review of airline behaviour and competition in the form of a market study. This would not necessarily be the silver bullet in reversing the trend of passengers paying more for less when flying around the country, but it is worth considering by a Government that says it wants to bring down the cost of living for Kiwis.

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