Air New Zealand has slashed many of its fares by up to 50% in a shakeup that chief executive Christopher Luxon calls the biggest overhaul of the airline’s domestic pricing structure in more than a decade – and competitor Jetstar remains committed to undercutting all of those fares.
Luxon challenged New Zealand’s hotels, rental car companies and tour operators to follow Air New Zealand’s lead.
The Air NZ airfare upset is limited to the Kiwi domestic market. It hasn’t spilled over onto the Tasman yet (don’t believe the hype!) though it just might. Competition is already fierce on the Tasman since Air NZ and Virgin Australia ended their partnership on Tasman routes last October.
An intriguing aspect is that Jetstar has committed to keeping its “price beat guarantee” in place – which means that if travellers find a flight with another airline that is cheaper (on Air NZ, for instance), Jetstar will beat it by 10%.
Jetstar spokesman Phil Boyen told New Zealand’s Stuff.co.nz news site that Jetstar’s “beat price guarantee” would stand.
“We encourage travellers to compare our fares before they book,” he said.
Jetstar Bombardier Q300
There are plenty of cheap airfares on the other side of the Tasman at the moment. Air New Zealand says its new fare regime will release more that 750,000 seats a year for sale at less than NZD 50 – a sum currently worth about AUD 48.
Air New Zealand is shrinking its lowest fares on 41 domestic routes. Travellers will be able to fly within each island for as low as NZD 39 and between the North Island and South Island for as low as NZD 39.
Air New Zealand’s longest domestic flight – the two-hour 1174 kilometre non-stop leg between Auckland and Invercargill launching in August, will have seats available from NZD 79. The distance is about 180km shorter than Melbourne to Brisbane.
“We have shrunk our lowest fares by up to NZD 45 in a move we believe will further supercharge domestic tourism,” Luxon said
“We’d love to see hotels, rental car companies and tourist experience operators follow our lead,” he added.
Fares on the airline’s main trunk routes are also shrinking – Auckland-Christchurch and Auckland-Wellington now start at NZD 49 one-way and Christchurch-Wellington from NZD 39.
Air New Zealand takes off from Wellington Airport
In response, Jetstar in New Zealand says it sold nearly 600,000 domestic fares for under NZD 50 last year, and more than 1.75 million domestic fares for under NZD 100, despite having a much smaller fleet. It already offers airfares from NZD 29.
Adding to the complexity, Qantas and Air New Zealand operate a codeshare agreement on 115 domestic routes in New Zealand and Australia and Qantas has its codes on about 30 Air NZ domestic flights.
Written by Peter Needham
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