Simon Nixon: Higher airfares disadvantage Hawke's Bay

The latest results from Hawke's Bay Airport show continuing passenger growth three years after Jetstar's arrival.

For the September quarter some 15,000 additional travellers arrived or departed compared to the same period a year ago, an 8 per cent increase, bringing the moving annual total to 715,000 compared to 476,000 three years ago, 415,000 five years ago and 449,000 10 years ago.

For too long, the airport board has been besotted with profits, forgetting the main purpose of the airport is to ensure the provision of vital communication and travel connections with the rest of the country and the rest of the world.

Air New Zealand may be carrying most of the passengers but it is Jetstar who brought us lower fares. Previously Air New Zealand denied repeatedly it was overcharging Hawke's Bay travellers.

The airport board has set an ambitious target of one million passengers by 2025 or an average of 50,000 more passengers each year. I believe this figure is achievable.

The spectacular growth phase following Jetstar's arrival and resulting lower airfares may be coming to an end and the continuing growth in passengers may be due more to people moving here, growing visitation and the buoyant state of the Hawke's Bay economy. Past experience suggests it won't continue.

So rather than just hoping for growth to continue but doing nothing, the airport board needs to become proactive and create new opportunities.

Attracting Origin Airlines with its connections to Nelson and New Plymouth is a step in the right direction, but these services will not attract sufficient passengers to meet the growth target.

Only the three main centres have the population and distance parameters necessary to generate the numbers needed. Australia of course also has suitably large population centres but that is a subject for another discussion.

Although airfares to Auckland have dropped significantly, fares to Wellington and Christchurch seem completely out of alignment and this has to be impeding growth in traffic on these routes.

At this stage, it's hard to imagine Jetstar or any other airline being interested in adding these southern centres to their networks so Air New Zealand will be free to charge excessive prices.

A simple comparison undertaken on November 11 of the cheapest airfare available each day from Napier to Auckland, Wellington or Christchurch during the week Friday, November 23 – Thursday, November 29 illustrates the point graphically:

• Auckland fares ranged between $52–216 and averaged $86;

• Wellington $94–313 and averaged $148;

• Christchurch $166-330 with an average of $204.

Clearly the fares are very much cheaper to Auckland and there seems no justification for this difference.

The distance by air and flight times for the different routes are:

• Napier and Auckland 327km, scheduled flight time 60 minutes

• Napier and Wellington 271km, scheduled flight time 55 minutes

• Napier and Christchurch is 574km, scheduled flight time 90 minutes.

Direct aircraft operating costs such as fuel, maintenance, interest, depreciation and crew expenses are proportional to time in the air rather than distance flown.

Passenger handling, ground and passenger processing costs are likely to be very similar for all three routes.

On that basis, we might expect airfares to Wellington to be not too different to Auckland while Christchurch flights might be about one and a half times those to Auckland.

This of course is not the case. Air New Zealand prices are almost always very much higher from Napier to Wellington while Napier to Christchurch flights cost much more than one and a half times the cost to Auckland where of course Jetstar competes and in fact seems to offer significantly cheaper fares than Air New Zealand.

The seating capacity provided on each of the routes provides further evidence of monopoly manipulation. Although there has been a huge increase in seating capacity to Auckland including an extra 200 seats each way on Jetstar, capacity to Wellington remains static at 5 return flights while there are still only two return flights most days to Christchurch also unchanged over three years ago.

The higher airfares disadvantage Hawke's Bay yet our local councils and MPs appear quite uninterested.

The Clarke/Cullen administration positively obstructed improvements then needed to the airport and while National was a little better it still fell well short of what was needed. With the present Government firmly committed to improving regional performance doing something to fix these airfare anomalies would make a huge difference yet cost very little to implement.

The Commerce Commission, our supposed guardians against uncompetitive practices, has previously been advised of these anomalies but have failed to act. It has previously regulated industries including electricity lines companies and airports and regional air services would seem worthy of serious investigation.

* Simon Nixon is a Hastings district councillor.