Domestic airfares rise by 8.5%, well above inflation

AUCKLAND: Air New Zealand has released figures showing it has sold a million domestic airfares for less than $50 in the past year, a day after the body representing airports pointed to an 8.5% overall increase in past 12 months.

Inflation data showed airfares had increased 12% in the past quarter.

Airports New Zealand said the 12month increase coincided with Jetstar’s withdrawal from regional routes and the impact of an agreement between Air New Zealand and Qantas to cooperate in each other’s domestic markets.

Airports NZ chief executive Kevin Ward said the price increase means every domestic passenger was paying $14 more for their flight, on average, compared with the corresponding period 12 months ago.

‘‘Families, businesses and tourism will be the losers from the big jump in flight costs,’’ Mr Ward said.

‘‘Increased fares translate directly to fewer people able to travel.’’

Air New Zealand dropped leadin fares to boost domestic demand when the market softened early last year. It also pledged to hold leadin fares for a year at levels sold on Jetstar regional routes which the Qantas subsidiary pulled out of at the end of last year.

It reduced its lowest fares on 41 domestic routes in February 2019, reducing some by up to 50%.

This meant some fares between the North Island and South Island fell as low as $39.

Air NZ chief revenue officer Cam Wallace said the response to the reduction to the airline’s lowest fares had been fantastic.

‘‘When we announced this overhaul in February last year, we committed to making three quarters of a million seats a year available for less than $50. It’s terrific to have well and truly surpassed this and to hit the one million milestone.’’

About 600,000 of these fares sold for under $50 have been for flights on regional routes, Mr Wallace said.

He said the airline ‘‘remained committed’’ to low fares but advised passengers to book early to get the best possible deals.

Airports and airlines are lobbying the Government over changes to the Civil Aviation Act, with airports worried about proposals that could change the way they set prices.

Mr Ward said according to his organisation’s calculations, the leap in domestic airfares would cost passengers an extra $165 million for a full year.

‘‘Domestic airfare increases on this scale are many times greater than the rate of inflation, and have a choking effect on regions at a time the Government is investing in provincial economies,’’ he said.

There was no official data on fares for individual routes, so it was difficult to tell if some cities and towns had been hit harder than others.

The body representing airlines operating here, the Board of Airline Representatives, said New Zealand airports had fired doublebarrelled shots across airlines’ wings.

Executive director of BARNZ, Justin TigheUmbers, said domestic airfares had risen, but it was true airlines were under cost pressure. — The New Zealand Herald