Travel agency giant vows to ditch Air New Zealand

By CATHY ARONSON and SIMON HENDERY

Hundreds of airline catering jobs are at risk and the country's largest travel agency has threatened to withdraw millions of dollars of business following Air New Zealand's cost-cutting push.

The Flight Centre says it will take its business, worth $205 million a year, to Qantas and other carriers if Air New Zealand stops paying 4 per cent commission for domestic flights in October, when its new low-cost service starts.

The austerity measures also threaten 400 catering jobs.

Staff at Caterair fear they could be laid off when the in-flight meals are swapped for tea and coffee to save costs.

The firm has plants at Auckland, Wellington and Christchurch.

The national secretary of the Service and Food Workers Union, Darien Fenton, said up to 400 workers could be affected.

"It is a terrible way for them to find out they could lose their jobs," she said.

These ripple effects emerged yesterday, a day after the national carrier outlined measures to slash costs and generate profits.

It is axing business class for a one-class express service, at a cost of about 200 jobs, including administration staff and cabin crew.

The airline also wants passengers to book tickets online so it can offer cheaper flights.

But Flight Centre global chief executive Graham Turner said that in its attempt to save about $5 million a year in commission, Air New Zealand stood to lose hundreds of millions.

Flight Centre would withdraw both its domestic and international business.

"To say this is a brave move on Air New Zealand's part is a gross understatement.

"We will now talk to Qantas and other carriers."

Flight Centre was concerned that Air New Zealand would also reduce the 5 per cent commission on tickets to Australia within the next 18 months, but the airline has denied it has such plans.

Flight Centre estimates that its agents book 60 per cent of domestic flights in New Zealand and 90 per cent of international flights.

Air New Zealand sales executive Norm Thompson said agents would get commission for reaching target sales.

In a bid to offer the lowest prices, "why would we want to put a price on the internet and have built into that a cost of commission?"

Air New Zealand wanted to keep the Flight Centre business but would not reinstate the commission, he said.

BTI corporate travel marketing manager Greg Bridgman said it had accepted the removal of the commission.

Customers paid a fee when booking on Freedom Air, the airline's budget subsidiary, which does not provide commission.

Travel Agents Association president James Langton said the changes reflected a more competitive domestic market that was pushing down prices.

"The market has been diluted and it has created a new kind of traveller - those who thought they could not afford to travel."

In announcing the changes, Air New Zealand chief executive Ralph Norris said passengers wanted cheaper flights rather than in-flight meals.

nzherald.co.nz/aviation

Related links

nzherald.co.nz/travel