Air NZ cost health board $1.8M

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Air New Zealand’s “rapacious approach” to air fares has cost the region’s health board an additional $1.8 million since competing airline Origin Pacific collapsed, the equivalent of 100 hip replacements, 1000 cataract operations or the annual salaries of 25 nurses.

The Nelson Marlborough District Health Board’s former chief executive John Peters – who retired from the DHB in 2012 after eight years as its head – says since Origin Pacific was competed out of the market in 2006 the DHB has faced additional costs on its air bills of $1.8 million.

“Origin stopped carrying passengers in August 2006, and by the end of the DHB’s financial year in June 2007, ten months later, the costs for air travel had increased by over $200,000 compared to the same period the previous year of using Origin. That was nearly 20 per cent increase, when the actual passenger numbers had grown by less than two per cent.”

He says in the seven and a half years since then, and at that annual rate of around $240,000 additional cost per year, the cost of air travel will have exceeded what would have been paid to Origin by something around $1.8 million. “There is no compensation from central government – that money has to be found from the local health budget.  To put it in perspective, this represents around 100 hip replacements, or 1000 cataract operations, or 25 nurses – or any number of other vital health services for the Nelson and Marlborough region that could no longer be provided, but instead goes to Air New Zealand to shore it up on the routes it still has competition.”

Air New Zealand was contacted to answer questions raised by John but did not get any information through before the paper went to print. John says the DHB raised the issue with Air New Zealand on a number of occasions but the standard response was that they do have a number of low cost fares on most flights. “Unfortunately, we could never get patients to co-operate with having their illness or accident at a time to suit Air New Zealand’s advance booking requirements, and so the late booking high prices remain unavoidable.”

Although John says the DHB was top of the list of those affected as “probably the largest single user of passenger services in the top of the South Island”, the approach to fare pricing has cost the region significantly in lost opportunities.
The concerns from the former CEO of the DHB is one of many that have come forward since Nelson Weekly highlighted the issue of Air New Zealand’s prices. Their high fares have also attracted criticism from its most regular flyers, families and Grey Power.

A Nelson family said they looked at flights with Air New Zealand to fly from Nelson to Los Angeles in the school holidays later this year. The price was $12,000 return. To fly from Christchurch to Sydney and then Los Angeles with Virgin Australia on the same days was $7000, a $5000 difference.

Nelson Grey Power executive member Addo Mulders says he sought a meeting with Prime Minister John Key in February to discuss the issue, as many elderly are simply choosing not to travel because they can’t afford to fly. “There are specials but you have to have a computer system at home and a lot of elderly don’t have that in their homes so they miss out.”

He says he sought the meeting to try and force the government to stop Air New Zealand’s price “gouging”. “We want the government to rein them in and stop them demanding whatever they want to demand. That should be stopped and it’s not fair trading and it makes you laugh when we [taxpayers] own 50 per cent of the airline.”

Regular air travellers say they’ve been left with no option but to pay Air New Zealand’s high fares after it cancelled its frequent flyer scheme called Starfish.

Starfish allowed regular fliers to receive a 30 per cent discount on all domestic flights for an annual fee of $800, or a 15 per cent discount for those prepared to pay $200. It was a small relief from the high prices paid by those who don’t travel as often, but Air New Zealand has canned it, citing its take-up being less than expected.

One of its users, Matt Thompson, flies to Wellington and back every week for business and says he was shocked and disappointed when he was informed the service was to close. “We’re spending a lot of money with Air New Zealand and now there is virtually no benefit that comes with that.”

Cyndy Dever was another user of Starfish and says she often flew to Taupo and Napier for work but now the prices are “out of our league” and she will have to drive, turning a two hour journey into an 11 hour trip. “We get stung with the outrageous fares of $550 one way to Taupo. You can fly to Australia return for that.”

Editor’s note: For the second time in three weeks we’ve approached Air New Zealand for a balanced response and they have been “unable” to fully answer our questions, despite plenty of warning. It’s our belief that Air New Zealand’s communications department is trying to stifle this story, demonstrating the same lack of respect they’re showing the Nelson public to date. The desired result on their part is to hope like hell we all fall asleep or give up.