Is Air New Zealand crapping on New Zealand?

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#1981589 22-Mar-2018 14:54

I didn't feel I was being inconsistent. What I said was that after squeezing the routes dry for all they could get, Air NZ unceremoniously cast them aside. That may or may not be true, but it isn't inconsistent with my argument.

I believe it is obviously untrue and emotive. You can't 'squeeze a route dry' because the route doesn't get used up. If a route is unprofitable, why should they be forced to operate it by people who don't own it?

What you are advocating is about as reasonable as me demanding you take homeless people into your home because it's for the greater good.

If Air NZ has an obligation to investor taxpayers (it does), then the way to meet that obligation is not to overcharge them so it can give them their own money back.

So you say. I disagree and so does their board and presumably the vast majority of their shareholders. For a start, not all their investors use their service and any, why are you now talking about overcharging? We're talking about provisioning a service to Kapiti Airport, aren't we?

The argument is that Air NZ is milking its profitable domestic routes to subsidise lower fares on its international ones.

is it? Personally I don't believe they are - at least not on any route that Jetstar is on. Airfares have never been lower to most places and I don't believe for a second that an AirNZ service to Waikickamoocow is going to do much to subsidise their flights to LAX. Do you?

At the same time, by dropping the insufficiently profitable domestic routes it is crapping on its customers who have no other equivalent alternative.

Who says they won't in due course? Kaitaia dropped but Kerikeri has been massively upgraded. Kapiti dropped but they can use Wellington and if there's enough demand Chathams or the like will move in. Not everyone can have an airport! Unless perhaps you are in the sort of socialist utopias as Venezuela in which case the government can just mandate that they can!

And *that* is where idiots like Shane Jones are coming from.

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#1981593 22-Mar-2018 14:58

Rikkitic:

$280 for a one-hour domestic flight is actually more than I paid to go to Sydney. This is not a fair return. It is charging all the market will bear. Gouging, in other words.

@Rikkitic then Drive, walk or swim

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networkn

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#1981595 22-Mar-2018 15:02

Rikkitic:

I don’t agree with the argument that companies are in business only for profit and only have a duty to their shareholders. Companies are part of the community they operate in, and they enjoy a wide range of benefits from that community, both direct and indirect. Enlightened companies acknowledge this and make an effort to give back to their communities, even if that doesn’t provide an immediate financial return. I’m not sure if laying on an all-expenses paid golf trip for a very well-off former president qualifies.

Heh, I hate to break it to you, but what you "believe", and in this case, reality, are two different things.

*Legally* the board of a PUBLICALLY listed company *must* undertake Governance in such a manner as to satisfy it's shareholders. If there is a long-term profitability strategy to keeping non-profit parts of it's business operating then it will, but if there is no longer term return to profitability, unless it's mandate is that it must cover x% of NZ's main regions, it would be breaking the law to do differently.

Obviously, privately held businesses can do as they see fit (within the law).

Your example of the Obama dinner is a masterstroke in Marketing. They will profit in ways that aren't visible to you yet. 100M twitter followers the man has. He says NZ is a nice place to visit, I'd expect a tourism bump.

If the Government wants more regional coverage by the National Carrier, it's welcome to negotiate terms that are attractive to the business supplying it. I'd suggest either more attractive tax incentives or such...

Rikkitic

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#1981596 22-Mar-2018 15:03

Linux:

@Rikkitic then Drive, walk or swim

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Nah, I just took the bus. I could afford the fare, but it is a matter of principle.

Plesse igmore amd axxept applogies in adbance fir anu typos

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#1981600 22-Mar-2018 15:07

Rikkitic:

$280 for a one-hour domestic flight is actually more than I paid to go to Sydney. This is not a fair return. It is charging all the market will bear. Gouging, in other words.

Heh, sometimes I wonder where you are at.

How many people fit on a plane going to this domestic location? How many people are actually on the plane? Divide one by the other and then work out cost of flight and divide again. Add profit and set price.

It's very likely plane to Australia, more than 85% full. Also somewhat possible, different classes paying different rates. Not to mention rebates carrier might get from tourism board in Australian location or other such things.

Your bias toward big companies that comes up over and over and over again, gets in the way of logic sometimes.

Not everything is a conspiracy aimed to have big companies screw poor innocent consumers.

Sometimes something is expensive, just because it's expensive.

Rikkitic

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#1981606 22-Mar-2018 15:18

I take your point. But if Air NZ can afford to fly people for $68 one day (only since Jetstar arrived), why does it need $280 on another day? Yes, charge more on weekends by all matters. I don't have a problem with that in principle, but the amounts are outrageous (in my humble opinion, of course).

Anyway, I am not claiming I am right about this. I started this thread to express my opinion on the matter, which I have, and to invite the opinions of others, which the others have been gracious enough to oblige. The majority opinion seems to be that the airline we claim as our own is perfectly entitled to do anything it likes, and I guess as long as that continue to be the majority opinion, it will.

Plesse igmore amd axxept applogies in adbance fir anu typos

MikeB4

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#1981609 22-Mar-2018 15:22

Rikkitic:

I take your point. But if Air NZ can afford to fly people for $68 one day (only since Jetstar arrived), why does it need $280 on another day? Yes, charge more on weekends by all matters. I don't have a problem with that in principle, but the amounts are outrageous (in my humble opinion, of course).

Anyway, I am not claiming I am right about this. I started this thread to express my opinion on the matter, which I have, and to invite the opinions of others, which the others have been gracious enough to oblige. The majority opinion seems to be that the airline we claim as our own is perfectly entitled to do anything it likes, and I guess as long as that continue to be the majority opinion, it will.

it's called doing business, making a profit while trying to remain competitive. Does Harvey Norman sell its TVs for the same price 365 days ? does Nissan sell its cars for teh same price 365?

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#1981617 22-Mar-2018 15:44

@MikeB4:

Does Harvey Norman sell its TVs for the same price 365 days ? does Nissan sell its cars for teh same price 365?

They certainly don't have different prices on the same day and certainly not different prices on the same flight even.

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#1981619 22-Mar-2018 15:50

Rikkitic:

I take your point. But if Air NZ can afford to fly people for $68 one day (only since Jetstar arrived), why does it need $280 on another day? Yes, charge more on weekends by all matters. I don't have a problem with that in principle, but the amounts are outrageous (in my humble opinion, of course).

Anyway, I am not claiming I am right about this. I started this thread to express my opinion on the matter, which I have, and to invite the opinions of others, which the others have been gracious enough to oblige. The majority opinion seems to be that the airline we claim as our own is perfectly entitled to do anything it likes, and I guess as long as that continue to be the majority opinion, it will.

All Airlines use a complex system of tiered pricing to control profits. It's based on MANY factors (Supply, Demand, Fuel Prices, Landing and Docking Fees, Engineering costs) some of which your average person would not likely consider. I don't fully understand it myself. It's also worth considering that inside the profits you pay, is a portion assigned to engineering keeping the plane from falling from the sky, and to a larger degree, replacing these places, some of which cost 10's or 100's of millions each.

You might see it in action if you go to a website 3 consecutive days and try and book the same identical flights and times. There is an element of maximising profit and there will be the occasional time where the system generates prices that seem outlandish.

I can't defend Air NZ for every decision it makes and AirNZ seems a worse airline since Rob Fyfe left in almost every way. It was him that softened the edge that AirNZ was known for and worked very hard to earn back NZ'rs trust.

Airlines are big companies. Not everything they do will be perfect, but I think until evidence overwhelming supports the view they are trying to screw people, it's safe to assume they probably aren't.

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#1981621 22-Mar-2018 15:51

freitasm:

@MikeB4:

Does Harvey Norman sell its TVs for the same price 365 days ? does Nissan sell its cars for teh same price 365?

They certainly don't have different prices on the same day and certainly not different prices on the same flight even.

I've seen Harvey Normans offer different prices to different people on the same day for the same TV. I've even seen it in the same store :)

frankv

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#1981623 22-Mar-2018 15:54

scuwp:

Government interference forcing uneconomic routes will quickly see the airline bankrupt. I do feel sorry for the small towns left out but it is simply an economic reality.

Ah yes, that worked well, right up to the point where the Government had to bail them out.

MikeAqua

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#1981625 22-Mar-2018 16:01

AirNZ's model is the more empty the plane is the cheaper the seats are. It's demand driven so as seats on that flight becomes scarce resource, the price per remaining seat goes up.

Time of day can make big difference. For example the 7:00am NSN - WLG is usually significantly more expensive than the 7:45am. Same plane same route, demand driven.

Most of my seats I buy ahead and get for between $59 and $99. Others times I've paid hundreds for a single sector at the last minute.

Kerikeri is a disaster to get to. It is usually cheaper for us to hire a car for ~10 days from AKL than pay the extra to fly Auckland to Kerikeri and borrow a car their for fuel cost only.

Mike

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#1981626 22-Mar-2018 16:05

A Client of mine needed me to travel Auckland to CHCH on 3 days notice, and I needed times to be flexible one way within hours on the same day, and way back within a day or two. Total cost was around $970 Including 1 Bag.

I went down 2 weeks later for another reason, same flights but booked a month earlier total cost $230 return.

When my grandmother had a stroke and wasn't likely to see the night through, I went to the airport on no notice bought a ticket at the counter for the next available departing flight and the cost was over $800 one way. Worth every cent. They told me as a result of it being compassionate grounds that if I was able to supply a death certificate they would refund me 80% which I did and they did.

Would have gone at $800 without complaint.

allan

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#1981630 22-Mar-2018 16:12

Rikkitic:

I take your point. But if Air NZ can afford to fly people for $68 one day (only since Jetstar arrived), why does it need $280 on another day? Yes, charge more on weekends by all matters. I don't have a problem with that in principle, but the amounts are outrageous (in my humble opinion, of course).

Perhaps it depends where you are flying to at the weekends? I fairly regularly fly Air NZ between Wellington and New Plymouth (not a Jetstar route) at weekends and average fare each way would generally appear to be less at weekends. Standard "book ahead" price appears to be between $69 and $89 and currently $49 for end of May. By watching Grabaseat, I've scored them for as low as $19.

I understand the commercial concept of increasing the fare price when booking close to the day you are travelling, but I don't quite understand the rationale of abolishing the whole concept of standby fares. I would have though that selling a very last minute seat at a discount would be better than having no one in that seat at all.

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#1981634 22-Mar-2018 16:15

frankv:

scuwp:

Government interference forcing uneconomic routes will quickly see the airline bankrupt. I do feel sorry for the small towns left out but it is simply an economic reality.

Ah yes, that worked well, right up to the point where the Government had to bail them out.

That was more to do with the Ansett debacle i thought.

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