Air New Zealand’s Chief Financial Officer, Richard Thomson, has explained that the rising cost of airfares is a result of inflationary pressures since the COVID-19 pandemic. Thomson emphasized that the airline is not engaging in price gouging but is instead adjusting fares to reflect a significant increase in operational costs. He stated that Air New Zealand’s costs have risen by nearly 30% over the past three years, with airfare adjustments necessary to sustain the business.
Cost Increases and the Impact on Airfare Prices
Thomson highlighted that Air New Zealand, like many businesses, faces inflationary pressures, which have led to substantial cost increases. He explained that while these increases have contributed to higher airfares, the airline has made efforts to absorb as much of the cost as possible without significantly raising fares for regional and domestic flights.
New Zealand’s Geography and Market Challenges
Thomson also pointed to the unique geographical challenges of New Zealand, which is as large as Japan but with a population closer to that of Sydney. This creates a complex aviation market where operating costs are higher due to the need for multiple regional services. He mentioned that despite these challenges, New Zealand’s open skies policy allows competition, and any operator with the appropriate certification can enter the market. He reassured that the airline is not monopolizing the sector, as claimed by critics, and is doing its best to remain competitive.
Regional Frustrations and High Airfare Costs
While Thomson defended the airline’s pricing structure, regional residents have expressed frustration over the high costs of flights. Many individuals in smaller cities and towns, where competition is limited, have found themselves facing exorbitant fares. Matt Walker, a commuter from Rotorua, shared his experience of choosing to drive to Auckland to catch a cheaper flight rather than flying directly from Rotorua. He explained that this method saves him between $100 and $200.
Regional Concerns and Call for Fair Pricing
For some, the soaring airfares have made travel unaffordable. Angela Troup, a mother from Hawke’s Bay, expressed disappointment that her son could not come home from Dunedin for his first university break due to the high cost of flights. She shared that when checking flight prices for the break, the fares were in the mid-four hundred dollar range, which she found to be unaffordable. As New Zealand’s first university student in her family, she felt the financial burden was preventing her from seeing her son during significant moments.
Air New Zealand’s Financial Outlook
Despite these challenges, Air New Zealand has projected a profit of between $150 million and $190 million for the current year, down from $222 million last year. The airline’s financial success contrasts with the struggles of many regional travelers who are finding it increasingly difficult to afford flights. The airline’s investments, such as celebrity safety videos and new uniforms, have also drawn criticism, with some questioning whether these expenses are justifiable amid rising ticket prices.
The Effect on Sports Teams and Regional Events
In addition to individual travelers, sports teams are also feeling the pinch. Angela Ruske, general manager for the Otago Nuggets and Southern Hoiho basketball teams, explained how last-minute flight bookings could significantly impact the team’s budget. She shared that booking flights last minute with Air New Zealand is extremely expensive, and for a traveling team of 15-20 people, this puts a significant strain on the budget. The high cost of flights has forced some teams to make difficult decisions, such as flying on the same day as a game to save on accommodation and food costs.
Calls for Competitive Pricing
In rural areas, residents are also calling for Air New Zealand to become more competitive in its pricing. Nikki, a Blenheim woman, shared how the high cost of flights has meant missing out on her daughter’s sports events across the country. She urged Air New Zealand to reconsider its pricing strategy, saying that the airline should be more competitive and not take advantage of regional or rural communities.
