Associate Transport Minister James Meager says the government is not ruling out underwriting finance for regional airlines to expand their fleets. Photo: RNZ / Samuel Rillstone
The government is not ruling out underwriting the expansion of small regional airlines to help maintain routes and keep the price of flying competitive.
A Tauranga man has complained to the Commerce Commission about Air New Zealand's prices after working out it was cheaper to bus to Auckland, Uber to the airport and get a Jetstar flight to Wellington than to fly direct from Tauranga on Air New Zealand.
Last week, Checkpoint found it was cheaper to fly from Palmerston North to Rarotonga than Dunedin on the national carrier.
The Airports Association has also called on the government to use the Commerce Act to keep Air New Zealand's near monopoly prices in check.
But Air New Zealand said its costs had gone up 30 percent in the past three years and it was not price gouging.
Minister for the South Island and Associate Transport Minister in charge of Aviation James Meager told Checkpoint he was uncomfortable with the idea that flying could just be for the wealthy.
"I think for your average New Zealander, if you've got a family of four and it's going to cost you a couple of grand just to travel up north for a wedding or a funeral, I think that is a lot."
He said Air New Zealand's reason for increasing prices was related to input costs and Covid-19.
"I'm interested in what we can do as a government to get those airfares to a more reasonable place, and I think a lot of that is down to competition and the investments we're making in airport infrastructure."
The decision to have a competition market study is up to the Commerce Commission and the commerce minister, he said.
"The value of having a market study is that it demonstrates, or it can tell you whether or not there is sufficient competition in the market.
"I think we can see that with the size of Air New Zealand and the routes that they have that it's not a very competitive market, especially in the regional areas."
He said he was not sure a market study would tell more information than what was already known.
"We can do some things to try and encourage more competition.
"If you look at the roots where competition exists, for instance, where Jetstar flies, they are both the most reliable and most competitive routes.
"So, if we can do more to encourage the likes of Jetstar and the other smaller airlines to come in and compete, I think that puts some pressure on Air New Zealand."
The Airports Association has told Checkpoint with 84 percent of the market, Air New Zealand had a monopoly, and the government should step in to stop them charging excess fares.
Meager said the government was looking to review a fourth part of the Commerce Act which would include airlines.
"There's probably a good space here to look at the Civil Aviation Authority and the rules they have and whether or not we're putting unnecessary costs on airlines and airports.
"We've looked at supermarkets in the past, we've looked at petrol station operators as well and looking at airports and airlines is one of the things we can do as well."
Air New Zealand says its costs have gone up 30 percent in the past three years. Photo: RNZ / Nate McKinnon
He said he couldn't commit to using the Commerce Act to regulate price as it was a decision for the Commerce Commission.
"There are some consequences when you regulate price because when you regulate price, you also end up generating shortages and the last thing we would want would be to regulate prices of fares and then drive the airlines out of regions or out of routes and end up with flight shortages and schedule shortages."
The government could invest more in airports, he said.
"We can look at what we can do to actually support some of those smaller regional routes and make sure that the operators like your Chatham's or your Sounds Air or your Originair, who provide really good service to the regions, can do so on a long-term basis."
He said he met with the Airports Association and all of New Zealand's regional airlines a couple of weeks ago to hear their concerns.
"Ministers are working on a package of support for regional connectivity and regional airlines. We know that it's hard to get into the sector because the upfront capital costs are enormous."
The government is not ruling out underwriting finance for regional airlines to expand their fleets and hopes to have a decision soon, he said.
"I'm hoping that we can get something up to cabinet in the next few weeks.
"I know people are concerned about the price of the airfares and all I can say is that we are doing everything we can at the moment to look at all the options as to how we can make air travel more reliable, more consistent across the country."
Meager said he was uncomfortable with the idea flying could just be for the wealthy.
"If you look at historically, flying is not cheap at the moment, but we're not looking at some of the astronomical figures we would have faced in the past.
"But that's not to say that we shouldn't be doing more to support New Zealanders to get around the country and what we can do to make flying more affordable.
"I'm not comfortable with it being the domain of the wealthy and I'm not comfortable with forcing people to make decisions to drive six or seven hours to get their family to a service, to a funeral, to a wedding because they can't afford to pop them all onto a quick flight."
