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We’ve all read with interest that regional airfares are coming down.
Air NZ slashes domestic fares by up to 43 per cent
Before I get into this I want to make clear that I am a big fan of Air New Zealand. I use them internationally whenever I can. I respect Rob Fyfe as one of the classiest business people in New Zealand (though I wish he’d stop getting his kit off before everyone expects it of public company CEOs), the Air Nelson regional operator is superb, our Account Manager is wonderful, Q300s are great and normally flying with Air New Zealand is a relaxed experience.
The proposed FastBag service sounds spot on:
Air New Zealand is introducing a new Fast Bag service for Gold, Gold Elite and Koru members travelling on single sector regional Link flights within New Zealand. Customers travelling on Regional services who have a Fast Bag tag can go straight to the gate with their bag. Customers will scan at the gate and drop their bags on the Fast Bag trolley on the tarmac before boarding the plane. On arrival at their destination, customers simply pick up their bags from the Fast Bag trolley next to the plane.
Cool – no more stress of trying to sneak on the overnighter.
But lets look at those fares.
If you are doing business from Hawkes Bay a reasonable comparative fare to look at is first flight down, last flight back. If you’re traveling for business you try to get the best return on your travel cost. From the Bay you can comfortably be in Auckland, Wellington or Christchurch from 9-5. That is great.
Business travel is normally good at the beginning of the week and lets eliminate the people who’ve stayed for the weekend. So lets pick Tuesday as travel day.
There are cheaper fares, but flying at these times are the key times for regional business development, so these are the fares that matter.
- Traveling tomorrow Napier to Wellington return is $598 (WLG/AKL is $488)
- Traveling next week is $520 (WLG/AKL is $518)
- Lets look at the following week. Hmmm $572 (WLG/AKL is $398)
- Lets go a month out. Say we’re really organised. $442. Looks like the new fares are out. (WLG/AKL is $398)
- Lets try for 2 months. Good if you have a conference but pretty much useless for normal business. $338 (WLG/AKL is $398)
Even though there is less scale I’m sure the costs of operating the regional airlines are significantly less than Jets from the major airpots. So my conclusions are:
- The regions are more expensive for normally scheduled business travel – but not by as much as I expected.
- Booking far ahead at the key times doesn’t make much difference. You can get cheap off peak flights but that is of little use to business.
- I do suspect that the regions are subsidizing the competitive routes – but that’s not a slam dunk to expose
- The threat of competition for the regional routes must be real
Never the less, over $500 return seems too expensive for business travel. It’s outside the comfort threshold. It’s a penalty rate.
It also appears that planes are operating at far less than full capacity on these expensive legs.
Air New Zealand has done a great job building goodwill over the past few years but people in the regions feel abused. The pricing is up at a level which creates an emotional response. At <$200 return I’d feel good. At <$300 return I’ll do it begrudgingly. More than that I’m driving.
When flights get to $600 people get angry. That leads to encouragement of other operators.
As the flights are not at capacity Air New Zealand could do a much better job for the regional business traveller.
How about this:
- $200 return
- Pay in advance
- Commit to 25 trips a year ($5,000)
- All booked in advance but can move one up to a week out
Another combination might be $300 return for a 10 trip commitment.
I’m sure there is a win/win here for everyone. Until we have our fibre in place Hawkes Bay businesses should be flying regularly. As it stands flying to and from the regions is too expensive for businesses.
That is holding us back.
22:51, 19.10.2009
Rod, I was having this exact conversation with some business contacts while in Auckland on Friday. Pick a favourite destination, buy 20 trips up front on a use it or loose it basis over a 24 month period and get it all at a reasonable rate.
I’m sure Air New Zealand could play the unders and overs game and do quite well out of it while at the same time make it better for us traveling from the regions.
09:16, 20.10.2009
Rod, I have to agree with you completely. Business & leisure travellers in the regions are being penalized as Air New Zealand subsidizes its main trunk routes due to the stiffer competition it faces.
Until competition arrives into the regions (which seems highly unlikely due to the high setup costs or unless an airline like Pacific Blue or Jetstar service the routes) fares will remain high and impede regular travel.
As I live and work from Waipukurau I have the luxury of, when travelling to Chch or Wgtn, comparing between Palmerston North & Napier. I am about halfway between airports. I most often choose Palmerston North as the fare is atleast 30% cheaper. I haven’t worked out why there is such as a difference especially to Auckland as the distances are about the same.
I really like Air New Zealand for their innovative thinking and marketing. But, I do think that they are very clever at pulling the wool over our eyes. And lets face it, they are not an airline per se’, they are a ‘transport operator’ whose clear objective should be to make air travel affordable for all. Unfortunately, for the regions, we will continue to suffer until either competition arrives or external pressure is placed upon them. In the short to medium term, I believe the later is probably the only option.
22:35, 20.10.2009
Sounds like a Tui billboard in the making.
21:22, 21.10.2009
Everytime I need to fly and get the bill, I remember how much I love driving!
Not a good use of time, bad for the environment and often a good way to make the acquaintance of our cops – but flying is expensive and I don’t feel that Air NZ value us as customers.
10:31, 23.10.2009
I have always had the same feeling about the cost of flying from HB and thought it was a rip off. Thanks for doing the research Rod and for your great article.
I decided to do a little experiment and chose a weekday one week out. Then went on to Air NZ website and checked the cost of flying from several different towns to Auckland and Wellington on that day, choosing the “business” flight in the morning and the mid/late afternoon return. I though I would find a pattern, but was quite surprised with what I found. Here the data in order of price:
Flights to Auckland (and return) from:
Tauranga $346
Hamilton $388
Palmy $440
Nelson $514
HB $516
Wellington $548
Queenstw $748
Flights to Wellington (and return) from:
Nelson $385
Hamilton $463
Palmy $482
Tauranga $502
HB $520
Auckland $548
Queenstw $790
And couldn’t help checking these two out:
HB to Hamilton return $647
HB to Tauranga return $722