Fare hikes tipped now Air NZ has LA route all to itself

Photo / Janna Dixon

Air New Zealand will soon have the monopoly on direct flights between Auckland and Los Angeles, giving it the opportunity to increase fares, say two leading travel agencies.

Qantas announced yesterday that it would end its six flights a week between the cities from May because of financial pressure.

Following the announcement, Air NZ said it planned to add extra flights to its 12 direct services a week to provide extra capacity on the route.

A spokeswoman said they had no intention of raising airfares.

But Flight Centre's general manager of product, David Coombes, believed Air NZ would "absolutely" increase its prices because it no longer had any competition on the route.

"They will be able to charge a premium for people who want to go direct rather than connect from Australia, which will be what Qantas will do now."

The size of the increases also depended on external factors such as demand and fuel costs.

House of Travel retail director Brent Thomas said Air NZ would most likely cut the number of the cheaper airfares offered on that route to mask the increase.

"They can manage the number of seats that they might have at, say, $1500 versus $2500 - they can make the yield much better for them by just reducing the number of those cheaper seats."

However, aviation commentator Peter Clark said Air NZ wouldn't dare raise the fares.

"If they get the monopoly on the route, they're not going to price-gouge it, they are just going to continue on the way they are - logistically work hard to make a profit."

Mr Thomas said he was surprised by Qantas' announcement because the demand for direct flights to the west coast of the US had grown considerably in the past 12 months.

Passengers were also becoming increasingly set on travelling to the America direct rather than flying via Australia.

Mr Thomas expected Qantas cut-price offshoot Jetstar to launch an Auckland-Los Angeles service.

"It's very much a [case of] 'watch this space' at the moment," he said.

Jetstar Group chief executive Bruce Buchanan said the Los Angeles route could be a possibility for his firm.

The Qantas moves were announced by chief executive Alan Joyce in results that showed a A$215 million ($261.7 million) fall in underlying pre-tax profit in the six months to December 31.

The Auckland-Los Angeles route to be abandoned from May 6 was one of a number hit by the pressures on Qantas' struggling international operations.

The airline will also drop flights between Singapore and Mumbai, India, in May.

It has previously announced that next month, it would be pulling out of the Hong Kong-London and Bangkok-London routes.

Heavy maintenance operations in Australia will also be hit, with 500 jobs to be lost as "structurally redundant" because of aircraft retirement and operational changes, although Mr Joyce said none would be moved overseas.

FLIGHT FARES

Air NZ and Qantas offer a range of fares, between classes, for Auckland-Los Angeles flights.

Last night, the following return fares were available on Air NZ's website for the week beginning Monday, April 16:

* $1708: Economy class.

* $4508: Premium economy.

* $7608: Business class.