Commerce Commission Needs to Look at Regional Airfare Pricing

New Zealand First is calling on the Commerce Commission to investigate the obvious price gouging by Air New Zealand on regional routes.

“Air New Zealand has a near monopoly on regional air travel, with over 80% of the regional market, and it has been using its market dominance to charge fares which would not be viable if there was any competition,” says Transport spokesperson Denis O’Rourke.

“The airline knows that potential competitors face many difficulties if they try to set up in competition, the biggest of which is the aggressive response which Air New Zealand retaliates with when faced with a competitor. What you see then is sudden and large fare reductions to ensure that the competitor is burnt off as soon as possible.

“Air New Zealand cares little about its regional customers, and is only interested in maintaining market dominance, price gouging, and feeding regional customers on to the main trunk routes. The fact that air fares to regional centres are more than double those for the main centres speaks for itself.

“Air New Zealand’s recently announced profit of $262 million shows that it has the scope to reduce regional air fares substantially.

“While its fares have risen by almost 10% in the last year, passenger numbers have only risen 0.8% overall. Air travel to and from regional centres has actually decreased because Air New Zealand’s regional fares are suppressing demand.

“This is bad news for the regions which are trying to attract holidaymakers, family visitors and business people. It would be in Air New Zealand’s own commercial interests to encourage regional traffic by offering fares which more people can afford.

“The Commerce Commission has shown little interest in investigating this state of affairs. It should change its mind.”

ENDS

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