Air New Zealand plans to add 29,500 extra seats on flights to Hawke's Bay this year.

The airline's chief executive highlighted the additional service to the region when grilled by Labour MP Stuart Nash at a select committee yesterday.

Mr Nash told Christopher Luxon that the biggest barrier to doing business in Hawke's Bay was the price of airfares.

Mr Nash asked why those in the regions had not seen flight tickets decrease in price as fuel prices dropped.


"What would you say to people in the regions who say that on the routes where there is no competition, that you engage in monopolistic behaviour?"

Mr Luxon had said that was "unfair", and Air New Zealand had valued such communities by running services that connected them.

There has been more competition for the airline since Jetstar added regional routes, including Napier, in December. Mr Nash asked whether it was coincidence that Air New Zealand had dropped its prices after Jetstar's entry in the market.

Mr Luxon said Jetstar's low fares could not last, and their sharp promotional pricing was not going to be sustainable.

Mr Nash asked whether Air New Zealand would keep its prices down if Jetstar stopped flying to Napier. He said his research showed that, on routes with no competition, the fares had not dropped despite fuel prices going down.

"You can understand the cynicism of people in the Bay, when they are paying $500 return from Auckland, and suddenly there is competition and the price drops."

Mr Luxon said Air New Zealand would react to promotional pricing, and that average fares in regional New Zealand had trended down since 2009.

"I appreciate the perception, but I can tell you we are not sitting there deliberately thinking about how [to] make it tough for regional players in New Zealand to get connected into main centres."

Mr Luxon said yesterday that a combination of lower fuel costs, an expanded fleet and increased competition would all pull down prices.

Hastings District councillor Simon Nixon said it was good to see Mr Nash taking an interest because the region needed MPs to keep pressure on the national airline. "They charge what they want and if you don't fly with them, you don't fly at all. It's very expensive for Hawke's Bay, and I think it's one reason why our tourism industry has lagged because it's too expensive for people to come here."

Napier mayor Bill Dalton said he would love to see the cheapest airfares possible for the region and for Air New Zealand offer these. He understood the airline was a business, but also said "when there's competition on routes we see competition in prices".