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Recent comments from Air New Zealand at the Transport and Infrastructure Select Committee that the airline does not see the lack of competition in New Zealand aviation as a problem will come as another blow to regional travellers and businesses, New Zealand Airports Association Chief Executive Billie Moore says. “Regional New Zealand is living the reality of this every day. It looks like:
More expensive regional routes. Air New Zealand is increasing fares on non-competitive domestic regional routes to offset pressure from Jetstar. Regional airfares are up 4.2% for this half of the year while available seats fell 4.2%. On routes with Jetstar competition, Air NZ dropped fares by 4% and increased capacity by 0.6%.
Capacity cuts and full planes. Air New Zealand has reduced capacity at all but five of its domestic ports – and four of those five exceptions are airports where Jetstar operates. The airline is investing where it faces competition.
The withdrawal of commuter flights that regional businesses depend on. With over 80% domestic market share, there is little risk another airline will step in to challenge Air NZ’s decisions to cut early morning and evening flights. Regional businesses lose the flight times they need, with no alternative.
No new planes for regional routes. There has been no meaningful fleet investment for the regional network. The Q300 turboprop fleet is aging and utilisation of these aircraft has declined to 62% of historical levels. This means far less flying, fewer seats in the market and higher costs being passed through to consumers.
A less efficient airline. Without competitive pressure, Air New Zealand is carrying higher internal costs than international airlines operating in competitive markets.
Managed decline for regional New Zealand. Domestic seat growth has been less than half the rate of economic growth since 2014. The network still has 1.5 million fewer seats than we had in 2019.
“We talk about competition not just because it drives lower airfares, but because it creates stronger businesses and less vulnerability for consumers,” Moore said. “There’s no quick fix to get more airlines competing in the regions. But competitive disciplines can be applied through transparency and regulation, including airfare monitoring and Commerce Commission oversight.”
New Zealand operates the most concentrated domestic aviation market in the world among markets of comparable size, with Air New Zealand holding over 80% of domestic capacity and a monopoly on 80% of domestic routes. “In this context, it is deeply frustrating to see Air New Zealand continue to point to airport charges as a reason for rising fares,” Moore said. “Airports must invest in the essential infrastructure that the airlines need to run their businesses. Airport charges make up 7% of airline operating costs on average. A 10% increase in airport charges changes fares by 0.35-0.7%. Fuel, labour and aircraft costs have far greater impact. Airport charges simply do not drive airfare increases.”
NZ Airports said it welcomes Air New Zealand’s statement that it has no plans to withdraw from any of the 20 airports it currently serves. “That commitment is important and we acknowledge it. It means we now need to work together to get the network into growth mode – with the investment, frequency, and service levels that regional New Zealand needs and deserves,” Moore said.
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Asian Aviation staff is comprised of award-winning journalists based throughout the Asia-Pacific region led by Editor Matt Driskill.《亚洲航空》的编辑团队由主编马特·德里斯基尔 (Matt Driskill）带领，汇聚了遍布亚太地区的获奖记者。