Air NZ's online holiday ideas prompt ripples of disquiet

By CHRIS DANIELS

Air New Zealand is poised to start selling complete holiday packages online - bringing it further into conflict with the travel agency industry.

A spokesman said the airline was "actively exploring offering land-based packages via the company website" but would give no more information on its plans.

This move would bring it into direct competition with the travel agents, many of whom have moved away from the low margins of selling airfares into the much more profitable area of selling holiday packages.

Air NZ has been trying to sell as many tickets as possible on its website, where it offers the cheapest tickets. It has stopped paying travel agent commissions on domestic and transtasman fares, preferring travellers come direct to it, rather than through anyone else.

Holiday packages and accommodation are advertised on the website, but cannot be paid for online.

Gullivers Travel Group, which is in the midst of an $104 million initial public offering and set to become the first NZ stock exchange-listed travel agency, has stressed the importance of the "land" part of holidays.

Company founder and managing director Andrew Bagnall said that five years ago airfares made up two-thirds of the price of holiday packages. Now they took up only a third.

The two big travel agencies in New Zealand, Gullivers (which owns the Holiday Shoppe and United Travel franchise brands) and House of Travel, earn much of their revenue through wholesaling.

They package air tickets, hotel rooms, rental cars and other parts of a holiday, before selling it through chains of travel agency stores, which are either franchised or part-owned.

The big internet battle in the travel industry is between Gullivers and the House of Travel. Gullivers owns the New Zealand wing of the "Zuji" website, while the House of Travel has its own, New Zealand-developed online booking engine.

Zuji allows air travel to be booked around the world. House of Travel is so far just in the New Zealand-Australia-South Pacific region.

Such websites do no favours for the big carriers like Air NZ, because they search for cheap one-way fares.

This can mean passengers are pointed to flights on airlines with smaller marketing budgets, that may fly less frequently.

House of Travel founder and managing director Chris Paulsen said he would be concerned at Air NZ moving towards selling whole holiday packages on its website.

He questioned what motives the airline would have in doing so, other than simply getting more people to fly on their aircraft.

Airlines would start selling packages for "seat distribution" online rather than trying to provide good holiday experiences.

Tony Dominey, publisher of industry publications Travel Today and Tabs on Travel, said the relationship between airlines and travel agents had changed a lot in recent years.

Agents could not longer presume to tell airlines how to run their businesses, but the airlines should not be surprised if the travel industry "voted with its feet" by not selling their products.

Airlines had tried to offer holiday packages before and some - including the now collapsed Ansett Australia - had not been that successful.