Airfares rise as Air NZ struggles

By ANGELA GREGORY

Fares on some Air New Zealand domestic routes will rise 5 per cent from the end of next week.

Flights across the Tasman will cost up to $150 more.

Air NZ announced the changes yesterday, saying they were part of a plan to restore its financial health.

The company last year lost a record $1.3 billion and had to be bailed out by the Government.

Economy travellers to Australia face some of the biggest increases.

The rises take effect from January 12, and follow other transtasman increases in November.

A $50 increase in economy-class leisure return fares between New Zealand and Australia will hit most of the holiday travel market.

An Auckland-to-Sydney return economy fare will go from $599 to $649. A $150 increase to the most flexible economy (not business) class return fare will hit people flying on business or at short notice.

Such a fare from Auckland to Sydney will increase from $1199 to $1349.

For domestic flights, the mid-range super-thrifty fare and one-way thrifty fares both rise 5 per cent.

All other fares, including the cheapest, remain the same.

Air NZ's senior vice-president for sales and distribution, Norm Thompson, said the aim was to provide a comprehensive network that served customers' needs and was sustainable from a business perspective.

"We will continue to provide a selection of airfares that offer the travelling public good value - ranging from the lowest-priced special fare which comes with certain conditions through to the higher-priced fare which has no conditions."

He said the transtasman routes were important to Air NZ and it would continue to deliver a comprehensive service balanced against sound commercial decisions.

Air NZ spokeswoman Val Hayes could not comment on whether more rises were likely this year.

"We are in business recovery ... I can't say yes or no."

She said there were other ways of improving returns. The company would look at reducing the wage bill and other expenses.

Auckland travel agent Paul Collins said Qantas and Air NZ were offering the same fares now. Qantas was likely to match the increases, but the strategy would be in when it did.

He expected continuing tweaking of fares this year, which could also give budget carrier Freedom Air room to up its prices.

The airlines were also likely to start offering more short-term fare initiatives.

A Qantas spokeswoman said the airline had no comment except to confirm its fares had not changed.

The chief executive of the Travel Agents Association of NZ, Peter Lowry, thought travellers were still getting a good deal.

The market would remain competitive, he said.

"Anything can happen after last year ... mergers are happening, talks are happening. The industry has been faced with a crisis but the consumer still wants to travel."

Qantas last year stepped in to fill the gap left by its New Zealand franchise holder Tasman Pacific Airlines, which went into receivership.

It is expected to increase its domestic capacity here, and Virgin Blue may also enter the market.

The prospect of higher fares was greeted with dismay by people at Auckland Airport international terminal yesterday.

Lois Murphy, of Henderson, said: "I suppose it's better than the taxpayer having to pay again. We've already bought the airline. I would still fly Air NZ if I could."

Anita Merriman, from Tauranga, said: "I think it's horrendous. For the kind of money they sometimes charge to cross the Tasman, you can get halfway around the world."

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