Airlines don't want to sell every seat cheaply because then they couldn't meet passenger needs.
Airlines don't want to sell every seat cheaply because then they couldn't meet passenger needs.
An Air New Zealand network boss says airfares aren't being deliberately "cranked up" but are just high because demand is exceeding capacity.
Scott Carr, Air New Zealand general manager, longhaul, said the industry can be a big cash generator in the right circumstances.
And right now, with heavy demand anda shortage of planes and staff, that's where it finds itself.
"One way to lose a lot of money in the airline industry is to have too much capacity. The reverse obviously plays out in time and it's not by design at the moment, but just by virtue of everyone not having infrastructure up and running."
The airline experienced a surge in demand for seats to Japan when that country opened up late last month, and its domestic demand is running in excess of pre-Covid levels. Air NZ, which has bounced back into profit, put up prices on domestic routes by 20 per cent last month.
Carr, who has worked throughout Air NZ for more than 20 years, said nearly all airlines faced the same problem.
"We're in a difficult situation in the industry right now where supply is constrained and that does, just by virtue of all the algorithms and systems that people operate, drive average fares up," he said.
"It's a supply and demand equation, not an outright deliberate [move] to crank the prices up."
Airlines don't want to sell every seat cheaply because then they couldn't meet passenger needs, especially for those travellers who needed to get to their destination urgently for compassionate or business reasons.
Scott Carr, Air New Zealand general manager longhaul. Photo / Supplied
"Frankly, if we sold every seat cheaply, we'd sell out so far in advance and no one would be able to book a seat late. That's not an ideal solution," said Carr.
"Being able to deliver the seat is the first thing we have to do and then we worry about the price. And to be fair, the industry is struggling with the first piece."
Air New Zealand was bringing back its 777-300s from storage and considering using a wet lease operator to provide further backup for its network.
While the airline had put some promotional fares to the Pacific and North America into the market, he said discount fares were not the priority. Rather, it was adding to stretched capacity .
"That's where the focus goes on at the moment, not so much a tactical pricing activity to be honest. We just want to maintain focus on getting as many seats in the air as we can."
Contrary to what some people thought, it was a good sign to have a few empty seats – which would be available for late purchase (at a high price) - rather than all being sold early for a low price.
"Most people think that having full planes is the be-all and end-all. I worked in Ansett for Air New Zealand in Melbourne [in 2001]. When that business folded it was going under with the highest load factors in its history."
Carr said as part of Air NZ's expansion, it would step up flights to Japan from three to four a week from the end of November, a market key to the tourism rebuild and increasingly popular with Kiwis.
