Air New Zealand defends regional air fares claiming fares are down despite fall in regional profits

Air New Zealand CEO Christopher Luxon defended (30-Sep-2014) pricing on domestic regional services, saying the carrier is one of few in the world to serve as many regional towns as it does. Air New Zealand services every town with a population of more than 20,000 and says many of the services would be considered uneconomic by other airlines. Mr Luxon said the environment is "very challenging" and fares will always be expensive as smaller aircraft operate at a higher cost per seat: "Some markets have sufficient demand that can support the larger aircraft, some struggle and we have to adjust the schedule and frequency of services with the larger aircraft, and then some are so challenged that even at high prices we cannot cover our costs." Mr Luxon continued: "The key for us it to upgauge and get markets into larger aircraft to realise lower costs per seat to keep a downward pressure on prices... Profit from our regional network has declined over the last five years, and our average regional airfare is down 2% over the last five years." [more - original PR]