Air New Zealand says it is looking into its pricing structure. Photo: Supplied.

Air NZ meets with Smith over price hikes

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Air New Zealand is looking at its regional pricing structure after a ‘please explain’ meeting with Nelson MP Nick Smith that sought to calm commuters’ fears about airfare hikes.

And Nick says if action isn’t taken, a complaint to the Commerce Commission could be on the cards.

The meeting came on the back of the Nelson Weekly revealing that the airline had lifted its Nelson prices by upwards of 18 per cent year on year, even before its competitor Jetstar pulled out of the region.

Nick took those complaints to top Air New Zealand bosses last week to advocate for fairer fares for the region. He is also asking for transparency in how the airline makes its pricing decisions.

Nick says that he has been inundated with concerns from locals about a sharp rise in airfares since Jetstar pulled out of the Nelson region at the end of November 2019.

“Nelson is an isolated region, geographically, and air services are crucial to our links with the rest of the country.”

He says many small and medium businesses that run out of the region provide nationwide services that can’t compete if they are paying excessively for flights.

“Our tourism sector also relies on competitive airfares.”

Nick says that he made the point about how important air links are to the Nelson and Tasman communities.

“Air New Zealand acknowledged that with Jetstar’s withdraw, there has been an increase in demand which has increased the average price.”

He says more transparency is needed from airlines, especially from a company where the Government owns 52 per cent of shares.

“In many jurisdictions, like the United States and European Union, airlines are required to disclose average airfares by sector. I think the public has the right to know what the average fare is to know whether you’re getting price gouging.”

National has released a transport discussion document that has raised the policy change of requiring airlines to disclose information, like average airfares.

“I think more transparency is required.”

Air New Zealand told Nick that the airline needed to take on board some of the criticism around prices, and that the company is currently undertaking a 100-day, business-wide review to form its future direction.

While he’s hopeful that progress will be made around high airfares, Nick is not ruling out lodging a complaint to the Commerce Commission.

“I want to give them a fair opportunity to respond to my concerns about unaffordable fares, and I am hopeful that it may result in a change in price and policy for centres like Nelson where they have close to a monopoly.”

In the meantime, he is encouraging people to use the services provided by both OriginAir and Sounds Air to give the larger company some competition.

An Air New Zealand spokesperson said that the meeting Nick had with chief revenue officer Cam Wallace and Head of Tourism and Regional Affairs Reuben Levermore was “productive”.

“We have taken onboard Nick Smith’s comments and provided him with some additional Nelson data as requested at the meeting.”

According to the data provided by Air New Zealand, seats on services on Nelson routes have increased by more than 130,000 in the last five years. Over this period, the average fare on our Nelson services has fallen, while costs per seat have increased.