Air NZ price cuts ‘short on facts’
More facts are needed in order to determine who will benefit from Air New Zealand’s new pricing model, a travel agent says.
Yesterday Air New Zealand chief executive Christopher Luxon said the airline was immediately cutting entry-level airfares by up to 50 per cent on 41 domestic routes in what he described as its biggest pricing shakeup in more than 10 years.
The result would be more than 750,000 seats a year available for less than $50, he said.
House of Travel commercial director Brent Thomas said time would tell whether this would lower average airfare costs across the board or benefit only customers who had flexibility in what time and days they travelled.
‘‘We’re short on facts at the moment. There’s a whole lot of questions. What we don’t know is if this is a revenue-neutral position or a true haircut for airfares,’’ Thomas said.
Flights were near capacity on many domestic routes already, so to stay revenue neutral Air New Zealand would need to make top-end fares even more expensive in order to make up for the new, discounted fares, he said.
It would not become clear how material the impacts of the new pricing would be until new average airfares were calculated over at least a three-month period.
‘‘What we don’t know is if this is a revenueneutral position or a true haircut.’’ Brent Thomas, House of Travel
Luxon said travellers would be able to fly within each island and interisland for as low as $39.
‘‘We have shrunk our lowest fares by up to $45 in a move we believe will further supercharge domestic tourism and we’d love to see hotels, rental car companies and tourist experience operators follow our lead,’’ he said.
The new fares are available for purchase immediately for travel from March 25.
Regional New Zealand was a big winner from the move. Seat-only fares include Auckland to Gisborne or Kerikeri for $39 and Auckland to Blenheim or Nelson for $49.
Main trunk route airfares were also cut. Auckland-christchurch and Auckland-wellington, for example, now start at $49 for one-way fares.
Flight Centre’s New Zealand product general manager, Victoria Courtney, said Air New Zealand’s announcement was great news for customers. She advised travellers to book as far in advance as possible, before the cheaper fares sell out.
‘‘Our advice is to reach out to your travel expert to get advice. By understanding trends such as how far in advance to book, what day of the week to travel and what regions are seeing less demand, travellers can maximise savings, particularly when travelling over peak periods.’’
Travellers at Marlborough Airport terminal in Blenheim yesterday had been eagerly waiting to see how their region would be affected.
Blenheim retiree Rob Leask said his children lived in Wellington so he and his wife would fly a few times a year, using the airline’s discounted Grabaseat flights. If flights dropped to half the cost, they would fly more often.
The changes are the biggest shakeup to Air New Zealand’s domestic pricing structure since 2002 when it introduced ‘‘express class’’, which did away with business class on domestic routes in order to make way for more seats.
The latest restructure comes a month after the airline downgraded its earnings before tax to between $340 million and $400m for the year to June 30.
That was down from the previous forecast of $425m to $525m, which excluded an estimated $30m to $40m impact due to schedule changes stemming from problems with Rolls-royce engines on its Boeing 787 Dreamliners.