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Peter Clark: aviation commentator on domestic flight prices soaring in November · Best of Business

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  Speaker 1: You're listening to a podcast from newstalk ZEDB. Follow this
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  Speaker 2: Prices for domestic flights rose more than ten percent in November,
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  Speaker 2: according to stats nz IT. It's the highest increase since
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  Speaker 2: July last year. In mid November, there were reports of
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  Speaker 2: flights nearly tripling in price due to demand from people
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  Speaker 2: flying to uguesstic Coldplay. Aviation commentator Peter Clark is with
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  Speaker 2: me this afternoon to try and break this down. PETA
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  Speaker 2: good afternoon, Yeah.
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  Speaker 3: A good afternoon to you.
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  Speaker 2: Should we have to accept, Well, first of all, do
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  Speaker 2: you accept that this November increase is down to events
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  Speaker 2: like Coldplay and other concerts around the country.
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  Speaker 3: Well, those peak demands to increase feares momentarily really over
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  Speaker 3: a few days. So they're just spikes in the fear
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  Speaker 3: ratio that we see on a day to day basis.
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  Speaker 3: But the fears do rise dramatically when the algorithms portrayed
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  Speaker 3: that theirs to be a demand for certain routes at
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  Speaker 3: certain times.
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  Speaker 2: Is this surprising? This sounds to me like basic supply
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  Speaker 2: and demand.
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  Speaker 3: It is supply and demand, But then I think sometimes
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  Speaker 3: the airline doesn't have the supply to offer, so they
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  Speaker 3: capitalize on filling every seat at the last minute and
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  Speaker 3: know that they can demand a fairly high fear. You
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  Speaker 3: can get your graber seats earlier on, but you can't
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  Speaker 3: plan in the future six to eight months out on
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  Speaker 3: a fear that you might need and a demand for
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  Speaker 3: a rugby game or a game or a concert.
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  Speaker 2: No, but I mean, how do you get around this?
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  Speaker 2: What is the way around this? The airline itself was
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  Speaker 2: said basically, yes, there were spikes in the month because
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  Speaker 2: of things like coldplay, but also there were other major
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  Speaker 2: events on. There were marathons here, there and everywhere, and
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  Speaker 2: those lower those cheaper fairs get booked up quickly and
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  Speaker 2: then everyone else is on the high ones.
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  Speaker 3: Well that's the way it is going to be. But
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  Speaker 3: I do think sometimes I feel our high fears are
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  Speaker 3: definitely far too high. I think the airline's got to
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  Speaker 3: realize that it is the only monopoly player on the
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  Speaker 3: domestic markets, especially to the small places Gisbon, Cooko's, fom
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  Speaker 3: Arrays and all and Tarous, you know, and we need
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  Speaker 3: those airlines to offer frequency and capacity and not overcharge
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  Speaker 3: because it's the demand is there for those.
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  Speaker 2: Flights They made one hundred and forty six million dollars
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  Speaker 2: in net profit after tax to June, which was down
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  Speaker 2: drastically on what they hope to make. Is that a
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  Speaker 2: super profit? How does that compare to other countries?
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  Speaker 3: Well, I don't know whether you can compare it because
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  Speaker 3: we are owned. The airline is actually owned basically by
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  Speaker 3: the shareholders, which is the government and private shareholders. So
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  Speaker 3: the attitude of the the airline is we have to
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  Speaker 3: return a profit to the shareholders. But how much should
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  Speaker 3: that share that profit be or should we be looking
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  Speaker 3: at treat replacements, engineering costs and other things that could
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  Speaker 3: be reduced. Stop spending all this money on eco planes
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  Speaker 3: at the moment. I know that's very important in our future.
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  Speaker 3: But at the moment, we need to run the airline
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  Speaker 3: for the people of this country, and I think that
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  Speaker 3: is the number one thing, And sometimes I think that's
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  Speaker 3: been overlooked.
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  Speaker 2: You think are we going go broke? Do you reckon?
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  Speaker 2: I mean I said too much? Hey look at me,
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  Speaker 2: I can fly my plane on vegetable oil and not
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  Speaker 2: enough I can actually get you there on time.
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  Speaker 3: Well I'm starting to feel that with the National Airline,
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  Speaker 3: as it is a monopoly airline. It's as I said,
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  Speaker 3: and I feel sometimes that I think that in New
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  Speaker 3: Zealand needs to actually look at what their key thing is.
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  Speaker 3: It's to transport people around New Zealand. This is domestically
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  Speaker 3: at a fair price, and I think spiking prices to
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  Speaker 3: capital eyes on those demands, to me is unfair. Reduce
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  Speaker 3: the profit margin and start looking at our future as
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  Speaker 3: an airline to offer frequency and capacity to the people
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  Speaker 3: of the country.
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  Speaker 2: If you don't make a profit, how do you invest
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  Speaker 2: in new planes.
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  Speaker 3: Well, you've got a plan for new planes. They become
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  Speaker 3: a cost in your planning, so that profit would be
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  Speaker 3: distributed through planning over several years. A plane doesn't come
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  Speaker 3: by today, get it tomorrow, You plan it over a
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  Speaker 3: five year period. And I think our domestic market at
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  Speaker 3: the moment some of our planes are up seventeen years
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  Speaker 3: old on our domestic market and we are seeing a
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  Speaker 3: lot more breakdowns and a lot more costs running the
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  Speaker 3: domestic airline. To me, sometimes we need to get past
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  Speaker 3: that also, and we should have had earlier fleet planning.
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  Speaker 2: Thanks so much for your time, Peter Peter Clark, aviation commentator.
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  Speaker 2: If you're just joining us, the flights domestic flights rows
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  Speaker 2: ten point eight percent November, according to stats in Zed.
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  Speaker 2: This offt the back of a very busy month for
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  Speaker 2: some concerts and some marathons, etc. Which push demand up.
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  Speaker 2: But also let's not forget the supply side. They've got
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  Speaker 2: their Pratt and Whitney engines that have got maintenance issues.
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  Speaker 2: Six of the Airbus NEOs out of action at any
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  Speaker 2: one time. Apparently they've got problems with the Dreamliners. So
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  Speaker 2: it's almost a perfect storm up in the skies at
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  Speaker 2: the moment. Love to know your thoughts. Nine two ninety
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  Speaker 2: two is the number to text. I had to book
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  Speaker 2: a flight yesterday to fly yesterday at the very last
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  Speaker 2: minute for a personal thing just same day there and
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  Speaker 2: back Auckland Wellington five hundred bucks and one of those
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  Speaker 2: flights was Jetstar. I think the Jetstar one was about
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  Speaker 2: one hundred and forty. And yes, that's very very expensive,
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  Speaker 2: but I had to do it. I don't think that's
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  Speaker 2: that's unreasonable for a same day booking.
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