Consumer NZ calls for inquiry into Air NZ New Zealand pricing model

There are allegations Air New Zealand is taking Kiwis for an excessively expensive ride across the Tasman.

Consumer NZ tracked a series of return flights on the national carrier for a family of four over 18 weeks to see what happened to prices during school holidays.

According to Consumer, flights in the school holidays were up to 167 percent more expensive than in the three weeks prior.

Compared to Qantas prices during the same periods, Air New Zealand came off second best, the study found.

Consumer NZ chief executive Jon Duffy told Checkpoint they had looked at flights between the main centres and Melbourne and Brisbane.

Unsurprisingly, fares during the school holidays were more expensive. But the research team was "really surprised" at how much more expensive the Air New Zealand flights were: 43 percent higher compared to Qantas fares being 26 percent higher on the same routes and timeframes.

Duffy said the national carrier's "standard response" was that it operated a dynamic pricing model, and the airline was "perfectly entitled" to do so.

"The question we have is why is Qantas able to keep its pricing relatively stable, accepting that prices do go up between term time and the holidays?

"Why are they still able to offer reasonably priced fares while Air New Zealand's fares seem to go up a really surprising amount during school holidays?"

The dynamic pricing model had "no transparency", Duffy said.

"We live in a country that is really dependent on air travel for people to get around ... particularly for people living in the regions...

"We need to have transparency about how Air New Zealand is setting its prices and we think the answer is a Commerce Commission market study, because we know there are competition factors at play here."

New Zealand had one of the least competitive aviation sectors in the world, Duffy said.

"We have a virtual monopoly with Air New Zealand on some routes, and pretty limited competition on others, so we think it's right for the government to ask the Commerce Commission to have a better look at this."

Consumer NZ acknowledged that the carrier had to make a profit, and had been facing challenges such as maintenance issues with its aircraft, which had constrained its ability to add extra flights on busy routes.

"We get that ... But to continue to operate a dynamic pricing model, which escalates pricing as tickets get used up, knowing that they're under-servicing capacity on certain routes, particularly these Australian routes during the school holidays, just is a licence to profit off people who can only travel at certain times of the year if they want their family to go too."

Checkpoint host Lisa Owen asked Duffy if price-gouging was occurring.

The Commerce Commission needed to look at the market to see if that was true, he said.

"We don't have enough transparency over how they're setting their prices to understand the relationship between the amount of planes they are able to put in the air, and the prices that they're charging and whether it's reasonable.

"These are questions that we think New Zealanders deserve answers to and the only way to do that independently is to have a proper look at it with a competition lens on it."

In response, Air New Zealand said demand-based pricing was standard practice across airlines, hotels and rental car companies.

"School holidays see demand soar and this approach allows us to manage supply and demand.

"We would love to add more capacity over these busy periods, however, with seven of our aircraft currently out of service due to global engine-supply issues, there are no spare aircraft to add to the schedule.

"We encourage customers to book early to secure the best deals."

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.