TAANZ trades salvo at AirNZ ahead of board meeting

By NZPA

Tuesday 25th June 2002

Air New Zealand's decision to scrap commissions on domestic flights looks set to be the hot topic at tomorrow's Travel Agents' Association of New Zealand (Taanz) board meeting in Wellington.

Taanz chairman James Langton traded the latest salvo today, warning consumers will be the biggest losers if Air NZ encourages travellers to ditch travel agents in favour of Internet and call centre booking.

"It isn't the 4 percent commission that's the issue. It is more that by Air NZ removing the remuneration -- whatever level it is on a domestic airfare -- they remove consumers' choice for what they want to do," Mr Langton told NZPA.

"If by Air NZ's marketing strategy the consumer is encouraged, or cajoled, to use a call centre or Internet site rather than a travel agent, once they go there and buy travel they actually don't get any choice."

Air NZ last month announced plans to scrap the commission from October as part of a wider move to cut costs in its local operations. The move sparked a backlash from travel agents, with agents in the Asia-Pacific region threatening to blacklist the airline.

Some agents have already adopted a "stop-sell" policy on Air NZ flights.

Mr Langton said Taanz is looking to the Commerce Commission and Consumers' Institute for backing, and may consider legal action against the airline.

He estimates Air NZ stands to save a "miniscule" $10 million in dropping the commissions.

Air NZ is believed to be making a tidy profit on its domestic operations.

A local airline analyst said yesterday Air NZ is benefiting "hugely" from the loss of competitors on its domestic routes .

"If you look at the old days before the demise of Qantas (NZ) and Ansett, a round-trip Auckland to Wellington was about $460, now it is up to $560 and has been as high as $640," the analyst said.

" The recent half-year result shows very good profit margins and really they're making all their money domestically."

The analyst said Qantas isn't providing strong competition because it doesn't serve enough destinations.

"Qantas will become much more viable when they take delivery of two new 737s, one of which is due in July and the other in November."

Trans-Tasman airfares are also more expensive. The cheapest airfare from Wellington to Sydney is $636, up 20 percent from $529 just over a year ago.

For those who don't book in advance, the increase is over 40 percent from about $1017 to $1456 today.

Air NZ said today its total May passenger load factor increased to 68 percent, up one percentage point on the same month last year.

Revenue passenger kilometres (RPKs) fell 10.1 percent to 1.418 billion, while available seat kilometres (ASKs) were down 10.6 percent to 2.099 billion.

Shares in Air NZ, 82 percent owned by the government following an $892 billion bailout earlier this year, last traded steady at 67 cents.

Mr Langton said talks are continuing on the commission issue, with Air NZ executives set to attend the Taanz meeting tomorrow.

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