Air New Zealand defends cuts to flight routes and capacity
The regions are in the brace position as Air New Zealand cuts more flights and capacity on routes.
Changes include swapping out larger jets for much smaller twin engine turboprop planes on some Queenstown and Dunedin flights: That means more than a hundred fewer seats on a flight.
In some cases, morning departure times will be later and return flights earlier in the afternoon, compressing any day trips.
The Christchurch to New Plymouth route is also being reduced by three flights a week.
On Monday, Air New Zealand confirmed it is ditching direct flights from Invercargill to Wellington from January next year, prompting allegations the national carrier is prioritising profits over its social responsibility to serve the regions.
Air New Zealand domestic manager Scott Carr told Checkpoint the decision was not based on profits.
"This is definitely a challenging situation, we care because we continue to operate those services and this isn't about profits, this is about actually stemming significant losses we make in those markets," he said.
"I don't think it's in anyone's interests that Air New Zealand is losing money flying markets like this."
Carr said it was inappropriate to devolve numbers on how much money Air New Zealand would lose, but it would experience significant losses due to the cuts on the routes.
Air New Zealand's business operations would not be jeopardised if the regional routes were to continue, he said.
"We have a duty in care [to] make sure we continue to deliver services to the country, but there's no question I think in anyone's mind that we would be cross-subsidising markets either.
"If some markets are making money some markets are losing money. I don't think that anyone would feel that's justifiable for us to cross-subsidise markets that are unprofitable."
He said Air New Zealand had an obligation to connect New Zealanders to each other and the world, but they must make sensible business decisions.
"This [is] not a personal attack on anyone. This is actually a business in New Zealand doing the right thing for business."
No one had quantified what social responsibility means, Carr said.
"We have stakeholders and shareholders, government and other stakeholders that we have to meet obligations to, so we do need to be profitable and social licence is something that we take very seriously as part of our whole brand, the two things go together."
Air New Zealand would continue to make profits, he said.
"You know full well from the half year results or the full year results that Air New Zealand didn't make any profit in the second half of the year, so that is a challenge."
- Read more: Air NZ profit drops by two-thirds to $146m
Air New Zealand understood some of the issues they are going through are a significant drop off in government travel as well as engine issues in their aircraft, Carr said.
"Some of these markets, the government travel's down by as much as 30 percent, and that really does hit the revenue line very significantly"
"We are also challenged by engine issues on our turbo on our Whitney engine narrow-body aircraft and on our Rolls Royce wide-body aircraft that flow through the network - some [of] these things will hopefully go away soon," he said.
In response to the Queenstown mayor's question on whether they will reinstate routes at some point, he said "nothing's forever and we would love to reinstate".
He said as soon as the airline could get five Pratt and Whitney-engined Airbus 321 Neos back in the air, Air New Zealand would consider what they were used for.
However, he could not guarantee the regional centres that if Air NZ did get the aircraft running it would reinstate the routes lost.
"I can't guarantee anything, I'm not a fortune teller, so who knows what it would be like in three years' time," Carr said.
"We could have huge growth in one market and no growth in another, and we'll have to redeploy those aircraft where we see fit and where we can best meet the demands of all New Zealanders."
With people at airports recently saying that Air New Zealand was price gouging them by charging hundreds of dollars more for fares in the school holidays, he said economics of supply and demand made the issue common across different industries.
"When demand outstrips supply, prices go up."
Flying in the school holidays was a choice for people, he said.
"People don't have to travel in school holidays. It's a choice they make and if they don't want to, they don't have to, it's all about choice. They don't have to pay the high prices," Carr said.
"It's what we've done consistently as an industry, not just in New Zealand. It applies to rental car companies, to hotel companies - whenever supply outstrips demand, prices go up. It's simple economics."
Carr said Air New Zealand would not raise air fares on the regional routes.
