Air NZ set to slash airfares

Air New Zealand is cutting entrylevel airfares by up to 50 per cent on about 40 domestic routes in what will be the airline’s biggest pricing shakeup in 15 years.

It is believed the national carrier has been working on ways to stimulate the domestic market, especially on regional routes, since it announced a profit downgrade last month.

The airline was preparing yesterday to inform travel agents of the price reductions.

Such drastic changes have not been made to Air New Zealand’s domestic pricing structure since 2002 when it remodelled its business to offer substantially lower fares and focus on internet sales.

Dubbed ‘‘express class’’, the redesign did away with business class on its domestic routes to make way for more seats. This coincided with a fleet renewal programme, which included an order for 14 new Airbus A320s.

Within two years of the changes Air New Zealand passenger numbers into Wellington increased 34 per cent.

Air New Zealand chief marketing and customer officer Mike Tod would not confirm the latest pricing changes but said the airline was looking at ‘‘positive changes’’ for domestic travellers.

These also included improvements to the airline’s digital, ground and in-flight experience, Tod said.

Air New Zealand is currently reviewing its network, aircraft fleet and costs. Tod would not comment on how that review was progressing.

It is not clear which routes will have pricing changes.

New Plymouth mayor Neil Holdom said he met with Air New Zealand representatives last week and they indicated there would be ‘‘significant discounts’’ on flights in and out New Plymouth, particularly around midday. He said they indicated airfares would be up to 15 per cent cheaper.

‘‘What is clear is they’ve got some capacity during those midday flights. They’re looking to target holiday travellers.’’

Aviation commentator Irene King said Air New Zealand needed to improve its domestic performance, which was a vital component of its business.

‘‘Exercising control over that market is so fundamental to their whole profitability equation. They have to be able to compete with Jetstar,’’ she said.

She said the domestic market had softened and Air New Zealand was reacting to that.

‘‘It’s about getting more people in New Zealand to travel at offpeak times so that they can fill up the aircraft. I understand some of the aircraft have been going out with pretty light loads.’’

Reduced airfares would help to turn around a perception held by many New Zealanders that the airline had been gouging the regions, she said.

House of Travel commercial director Brent Thomas said he did not expect to see ‘‘wholesale changes’’ across Air New Zealand’s pricing structure.