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HomeNewsGrim travel outlook amid Christmas one-way flights costing over $1100

Grim travel outlook amid Christmas one-way flights costing over $1100

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Air New Zealand has responded to passengers’ outrage over extraordinarily high fares this summer.

One-way fares from Auckland to Sydney have hit almost $NZ1200 ($A1100) in December, with two months still to go to the peak travel season, New Zealand Herald reports.

Even by Christmas travel prices, this is double the historical average. At the moment travellers hoping to hop the ditch are looking at $NZ1114 ($A1013) seat-only fares, without a return. This morning the airline told Radio New Zealand that it had priced the last seats on planes higher “to ensure those needing to travel urgently could fly”.

But travellers have accused the carrier of being less than compassionate considering the level of current fares.

“God help anyone who has a bereavement or has to travel urgently,” associate professor Andrew Smith said.

The academic from Victoria University of Wellington’s School of Accounting and Commercial Law said that the biggest driver behind the price hike is a lack of competition in routes across the Tasman.

He said Qantas fares are no better.

One-way economy fares from Sydney to Wellington are between $NZ900 ($A820) to $NZ1230 ($A1120) this Christmas.

The absence of many key airlines on the Tasman routes mean that price increases are more acutely felt.

“The supply has been unduly constricted for some time. Like Australia, I don’t think we reopened our borders early enough for summer and quite a few key airlines have yet to return,” Associate Professor Smith said.

Air Asia will only arrive in Auckland at the end of November, and several other large carriers including Thai Airways and Philippine Airlines are yet to fly back to New Zealand. This is having an effect on flight prices across the region.

The airlines that are operating out of New Zealand have other economic pressures affecting their fare price. Aviation fuel, inflation and ongoing labour shortages are all working to push up ticket prices.

However Associate Professor Smith said this does not account for the whole picture of rising fares.

“Fuel is roughly 30 to 40 per cent of an airline’s operating costs. You expect there to be a 20 to 30 per cent increase on fares – not double.”

The losses airlines incurred during the pandemic were well published. However these are not the same Covid-beleaguered company fortunes we saw last year. In Australia, Qantas had to update forecasts declaring unexpected profits on the Australian Securities Exchange.

“Qantas recently announced a surprise $1.2 billion profit. It could be embarrassing for Air New Zealand to be declaring a profit as I suspect they might have to,” the academic said.

The Air New Zealand share price has also been going up.

Earlier this month, the airline predicted earnings for H1 FY23 would be $NZ200 million ($A180 million) to $NZ275 million ($A250 million) before tax.

“Fuel prices remain highly volatile and that this is one of many factors that have the potential to slow our recovery and significantly impact earnings,” the airline said.

Air New Zealand said that there were a range of factors that came into play when pricing flights.

The airline said that it had to review fares following a “significant increase in fuel costs, combined with inflation”.

“Airlines price the last seats at a higher rate to make sure there are still a few seats available for customers requiring urgent travel,” chief customer and sales officer Leanne Geraghty said.

“Comparing one seat on a particular day or flight isn’t reflective of the whole route. Our advice to customers is to book early to get the best possible fares.”

Don’t expect seat sales or cheaper leisure travel

Travel agents are also seeing the pressure from increased fares.

One agent has seen her clients’ fares increase from $NZ600 return ($A550) last December to $NZ2000 (A1820) this year. When visiting relatives in Australia, she normally uses seat sales to get the best deals on her own flights well in advance, but these haven’t materialised.

She told the Herald there is “little appetite from airlines to offer sale fares to the extent they used to – don’t need them to fill planes at the moment”.

In the middle of 2021 she was quoting fares of $NZ450 ($A410) for Auckland to Sydney return. Now it is more like $2025 ($A1840).

With eye-watering fares and a lack of incentive to introduce seat sales, leisure travel will be the first group of travellers that are likely to cancel their plans.

“None of the above is the fault of the people – those with disposable income will still be able to travel at these prices but there is a far larger pool of people that won’t be able to travel if this price level continues.”

With a squeeze on the cost of living, one of the first things that will get cut in the family budget is leisure travel and weekends away. Now, travel agents worry that airlines may have “shot themselves in the foot” while on the way to recovery.

Consumer rights and flight pricing

Customer rights advocate Consumer NZ said that until more airlines return there is little passengers can do to keep fares low during the peak travel pinch, beyond booking early.

“Consumers have little choice but to shoulder these rising fares,” Jessica Walker, spokeswoman for Consumer NZ, said. “We recommend consumers are flexible with their time and date of travel – as this can lead to savings – and book as far in advance as possible.”

In other travel markets like Europe, airlines are required to provide “algorithmic transparency”, showing how airlines calculate fares for customers.

This is not the case in New Zealand, where airlines are able to use stored data and cookies on customer history to determine their willingness to pay.

“Browsing in incognito mode could be a double-edged sword. It could protect consumers from potential prise-raising, but could also mean if you’re a loyal customer, you miss out on associated deals,” Ms Walker said.

This article originally appeared on the New Zealand Herald and has been republished with permission

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