April 28, 2025 • 10 mins
Airfares are still on the rise, and the Government is considering getting involved.
It hasn’t ruled out underwriting the expansion of small regional airlines to help maintain routes and keep the price of tickets competitive.
Associate Transport Minister in charge of Aviation, James Meager says he’s uncomfortable with the idea of flying becoming accessible only to the wealthy.
NZ Airports Association CEO Billie Moore told Kerre Woodham they have to be upfront in that no airline is really going to go up against a government-owned carrier like Air New Zealand on existing routes.
She says it's not a viable option, particularly for smaller carriers.
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Episode Transcript
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Speaker 1 (00:06):
You're listening to the Kerrywood and Mornings podcast from News
Talks hed B.
Speaker 2 (00:11):
As we mentioned earlier, the government is not ruling out
underwriting the expansion of small regional airlines to help maintain
routes and keep the price of flying competitive. Minister for
the South Island and Associate Transport Minister in charge of Aviation,
James Megher says he's uncomfortable with the idea that flying
could become just for the wealthy. He said, I'm interested
(00:33):
in what we can do as a government to get
those airfairs to a more reasonable place. I think a
lot of that is down to competition and the investments
we're making an airport infrastructure. New Zealand Airport's Association Chief
Executive Billy Moore joins me. Now, very good morning to you.
Wanting to you so New Zealand Airports is the industry
body looking after the actual airports and the broader aviation sector.
Speaker 3 (00:58):
Yep, that's right, yep. So not the planes, so we
look after that the airports. We work on capacity building
across the network, but we've also recently been working closely
with the regional airlines as well, focusing on exactly those issues.
That Minister Megia has been speaking about.
Speaker 2 (01:19):
What do you think of the government putting money into
support competition against their New Zealand.
Speaker 3 (01:26):
It's a complicated space. Look that the overwatching issues are
that our domestic market is in decline. We haven't recovered
after COVID. We're at about eighty six percent of our
pre COVID capacity and the domestic network so kiwis will
be seeing that they've got less choice and more expensive
(01:48):
choices and getting around New Zealand. And it's also we've
seen a drop and frequency of flights as well, so
it's much harder these days, particularly for regional New Zealanders
to do day trips or travel for business around the country.
So we've got deep seated issues in the network at
the moment, and because of the dominance of their New
(02:09):
Zealand and their supply chain challenges, we have to think
about how we intervene in that space, and so one
of the options is to see what we can do
to support the regional airlines. The challenge is that they
are only three percent of our domestic market. There are
tiny slices, but are really important slices because they fly
to the places that air New Zealand doesn't go. So
(02:31):
when they are reporting real vulnerability and their business, we
have to be really careful and see, well, what can
we do to keep them tacking along, because once those
flights go, they probably, you know, very hard to get back.
Speaker 2 (02:49):
Well, I mean eighty six percent. I didn't realize that
the domestic market had been affected so badly and had
yet to rebound, But I guess it makes sense when
you think that people are struggling to feed the kids,
far less bundle them up on a plane and take
them to Queenstown.
Speaker 3 (03:05):
The funny thing is that the demand is still really strong.
The keywis would probably notice that flights are really full
and if you do have a flight cancelation or delay,
it's hard to get another flight. So demand is high.
People still want to travel. The challenges on the supply
side and you still has some well you know well
(03:28):
talked about challenges in that space with many aircraft grounded.
Speaker 2 (03:32):
Oh okay, so right, So when we haven't bounced back,
it's because we haven't had the planes to take the
people who do want to travel.
Speaker 3 (03:39):
Look, that's right, and what leads us to reflect on
when we look at it from the airport network perspective
is that we are very vulnerable to the business decisions
of one operator because they are so dominant in our system.
So the challenges of their New Zealand reverberate across the
country much more strongly than they might in another country
(03:59):
that has more competition in their system. So you know,
full credit to your New Zealand for the work that
they're trying to do to get back operate, but we
have to reflect on the fact that that has compromised
us in terms of our domestic connectivity very significantly and
probably for the next three to four years.
Speaker 2 (04:17):
So other airlines have tried and failed in the past
to compete in the regional space. So doesn't that say
that the market can't support it.
Speaker 3 (04:29):
Look, it's a really good question in that's the New
Zealand's view as well. You recently said to Select Committee
that they don't believe these rooms for another major operator
in the domestic market. I'm more positive about the prospects
I think. Look, the airline business is very complicated. Jetstar
obviously had had a period where they were operating in
(04:50):
the regions not that long ago, and stay Withdrew there
were some political reasons why they were in New Zealand.
In that way, they were looking to challenge in New
Zealand that was growing into the transairsman market at the time.
We see some green shoots. So Jetstar has expanded its
(05:11):
capacity in New Zealand. Lately. Quantus is now the most
dominant international carrier in some of our major airports, so
they've been growing in their international capacity as well, and
we're seeing you very soon we'll have those international routes
launching from Jetstar out of Hamilton and Dunedan. So I
(05:31):
still hope that there is room for some form of
growth there. However, if we find that that's not viable
because of the scale of New Zealand's population, then that
means we have to ask ourselves some hard questions about
whether some form of regulation or additional oversight is needed
in order to make sure that consumers are confident that
(05:54):
they're getting the right price and the right services on
the routes that are monopoly routes and that's eighty percent
of the New Zealand's domestic network are monopoly.
Speaker 2 (06:03):
What is the right price that the big player charges,
isn't it?
Speaker 3 (06:10):
Look it's a great point, and I think, Look, I
think in New Zealand is quite genuine when they say that,
you know, they they believe that it is the price
is appropriate for the costs that they are managing. That
as you for me is we've had this the state
of this market for so long, with the New Zealand
(06:30):
having a greater share of this market than you know,
even even the banks, the groceries. It's a least it's
less competitive in aviation than it is on all those
other hot topic market issues. What is that? What does
that then mean for for the lack of competitive pressure
that we've here in this market to bring costs down.
(06:52):
When a business doesn't have to compete against someone else
who's looking to grow their market share, can we really
be sure that those costs have been managed appropriately? You know,
it's it's basic economics and competition policy that more players
in a market will bring costs down. We've seen that
from the atriple Seas analysis in Australia as well, two
(07:12):
players on it or three players on a route have
brought down costs by sixty percent. So even if competition
isn't possible, we have to reflect on what that might
have meant to the way this dominant carrier is able
to manage its pricing and services. Their intentions may be
absolutely pure, but the lack of competition will no doubt
(07:35):
have had some impact on their business operations.
Speaker 2 (07:39):
I mean, even if air Chatams or Sounds Air or
Barrier Air or the like wanted to put on more flights,
I mean, how could they afford to buy new planes
and how long would it take for them to get
a new plane given that there New Zealand's struggling to
get them. You know, there is just no room for
more competition, is there, unless you get one of the
(07:59):
big international players coming into the country like Jetster That's right.
Speaker 3 (08:04):
Yeah, So this kind of two separate issues there. First
of all, the regional airlines do want to grow. We've
put forward a proposal to the government that it would
be very appropriate and helpful right now to consider essentially
a concessory loan scheme for these airlines to help them
(08:25):
procure and lease aircraft. They do see room to add
aircraft to some of their routes and this would be similar,
to instance, to the announcement mister Bishop made yesterday about
concessory loans for ev charging infrastructure. It helps bring down
the cost of capital for these small businesses to allow
(08:46):
them to invest in the same way a large business
like New Zealand can with the rates that they're able
to get when they are looking to raise debt. So
there are rooms there for a little bit of growth
and to support the viability of these airlines long term.
Because an airline light Year CHETAMS, it needs to have
a number of routes operating in order to maintain that
(09:08):
critical route to the tetems. You can't just fly one. However,
does that mean more competition in the system? Look, I
think we have to be quite upfront that no airline
really is going to go up against a government owned
carrier on existing routes. It is not a viable prospect,
(09:28):
particularly for these small carriers. The one exception being Barrier Air,
who has been able to operate Auckland carry Carey up
against the New Zealand for a period of time so far.
So that is a really good news story. But we
shouldn't expect these small operators to be up for competing
with their New Zealand. They are too small and the
vulnerability they would feel going up against the government own
(09:50):
airline is just too much. It would have to involve
a big investment play to try and get a say,
a Quantus Group investment into New Zealand, to see anything
more dynamic happening in this market.
Speaker 2 (10:05):
They will only come in. Yeah, well it's worth a look,
but I think they'll only come in if they can
see a buck in it. Billy, Thank you so much,
Billy More, Chief executive of the New Zealand Airports Association. Interesting.
Speaker 1 (10:17):
For more from Kerry Wood and Mornings, listen live to
News Talks at B from nine am weekdays, or follow
the podcast on iHeartRadio
You're listening to the Kerrywood and Mornings podcast from News
Talks hed B.
Speaker 2 (00:11):
As we mentioned earlier, the government is not ruling out
underwriting the expansion of small regional airlines to help maintain
routes and keep the price of flying competitive. Minister for
the South Island and Associate Transport Minister in charge of Aviation,
James Megher says he's uncomfortable with the idea that flying
could become just for the wealthy. He said, I'm interested
(00:33):
in what we can do as a government to get
those airfairs to a more reasonable place. I think a
lot of that is down to competition and the investments
we're making an airport infrastructure. New Zealand Airport's Association Chief
Executive Billy Moore joins me. Now, very good morning to you.
Wanting to you so New Zealand Airports is the industry
body looking after the actual airports and the broader aviation sector.
Speaker 3 (00:58):
Yep, that's right, yep. So not the planes, so we
look after that the airports. We work on capacity building
across the network, but we've also recently been working closely
with the regional airlines as well, focusing on exactly those issues.
That Minister Megia has been speaking about.
Speaker 2 (01:19):
What do you think of the government putting money into
support competition against their New Zealand.
Speaker 3 (01:26):
It's a complicated space. Look that the overwatching issues are
that our domestic market is in decline. We haven't recovered
after COVID. We're at about eighty six percent of our
pre COVID capacity and the domestic network so kiwis will
be seeing that they've got less choice and more expensive
(01:48):
choices and getting around New Zealand. And it's also we've
seen a drop and frequency of flights as well, so
it's much harder these days, particularly for regional New Zealanders
to do day trips or travel for business around the country.
So we've got deep seated issues in the network at
the moment, and because of the dominance of their New
(02:09):
Zealand and their supply chain challenges, we have to think
about how we intervene in that space, and so one
of the options is to see what we can do
to support the regional airlines. The challenge is that they
are only three percent of our domestic market. There are
tiny slices, but are really important slices because they fly
to the places that air New Zealand doesn't go. So
(02:31):
when they are reporting real vulnerability and their business, we
have to be really careful and see, well, what can
we do to keep them tacking along, because once those
flights go, they probably, you know, very hard to get back.
Speaker 2 (02:49):
Well, I mean eighty six percent. I didn't realize that
the domestic market had been affected so badly and had
yet to rebound, But I guess it makes sense when
you think that people are struggling to feed the kids,
far less bundle them up on a plane and take
them to Queenstown.
Speaker 3 (03:05):
The funny thing is that the demand is still really strong.
The keywis would probably notice that flights are really full
and if you do have a flight cancelation or delay,
it's hard to get another flight. So demand is high.
People still want to travel. The challenges on the supply
side and you still has some well you know well
(03:28):
talked about challenges in that space with many aircraft grounded.
Speaker 2 (03:32):
Oh okay, so right, So when we haven't bounced back,
it's because we haven't had the planes to take the
people who do want to travel.
Speaker 3 (03:39):
Look, that's right, and what leads us to reflect on
when we look at it from the airport network perspective
is that we are very vulnerable to the business decisions
of one operator because they are so dominant in our system.
So the challenges of their New Zealand reverberate across the
country much more strongly than they might in another country
(03:59):
that has more competition in their system. So you know,
full credit to your New Zealand for the work that
they're trying to do to get back operate, but we
have to reflect on the fact that that has compromised
us in terms of our domestic connectivity very significantly and
probably for the next three to four years.
Speaker 2 (04:17):
So other airlines have tried and failed in the past
to compete in the regional space. So doesn't that say
that the market can't support it.
Speaker 3 (04:29):
Look, it's a really good question in that's the New
Zealand's view as well. You recently said to Select Committee
that they don't believe these rooms for another major operator
in the domestic market. I'm more positive about the prospects
I think. Look, the airline business is very complicated. Jetstar
obviously had had a period where they were operating in
(04:50):
the regions not that long ago, and stay Withdrew there
were some political reasons why they were in New Zealand.
In that way, they were looking to challenge in New
Zealand that was growing into the transairsman market at the time.
We see some green shoots. So Jetstar has expanded its
(05:11):
capacity in New Zealand. Lately. Quantus is now the most
dominant international carrier in some of our major airports, so
they've been growing in their international capacity as well, and
we're seeing you very soon we'll have those international routes
launching from Jetstar out of Hamilton and Dunedan. So I
(05:31):
still hope that there is room for some form of
growth there. However, if we find that that's not viable
because of the scale of New Zealand's population, then that
means we have to ask ourselves some hard questions about
whether some form of regulation or additional oversight is needed
in order to make sure that consumers are confident that
(05:54):
they're getting the right price and the right services on
the routes that are monopoly routes and that's eighty percent
of the New Zealand's domestic network are monopoly.
Speaker 2 (06:03):
What is the right price that the big player charges,
isn't it?
Speaker 3 (06:10):
Look it's a great point, and I think, Look, I
think in New Zealand is quite genuine when they say that,
you know, they they believe that it is the price
is appropriate for the costs that they are managing. That
as you for me is we've had this the state
of this market for so long, with the New Zealand
(06:30):
having a greater share of this market than you know,
even even the banks, the groceries. It's a least it's
less competitive in aviation than it is on all those
other hot topic market issues. What is that? What does
that then mean for for the lack of competitive pressure
that we've here in this market to bring costs down.
(06:52):
When a business doesn't have to compete against someone else
who's looking to grow their market share, can we really
be sure that those costs have been managed appropriately? You know,
it's it's basic economics and competition policy that more players
in a market will bring costs down. We've seen that
from the atriple Seas analysis in Australia as well, two
(07:12):
players on it or three players on a route have
brought down costs by sixty percent. So even if competition
isn't possible, we have to reflect on what that might
have meant to the way this dominant carrier is able
to manage its pricing and services. Their intentions may be
absolutely pure, but the lack of competition will no doubt
(07:35):
have had some impact on their business operations.
Speaker 2 (07:39):
I mean, even if air Chatams or Sounds Air or
Barrier Air or the like wanted to put on more flights,
I mean, how could they afford to buy new planes
and how long would it take for them to get
a new plane given that there New Zealand's struggling to
get them. You know, there is just no room for
more competition, is there, unless you get one of the
(07:59):
big international players coming into the country like Jetster That's right.
Speaker 3 (08:04):
Yeah, So this kind of two separate issues there. First
of all, the regional airlines do want to grow. We've
put forward a proposal to the government that it would
be very appropriate and helpful right now to consider essentially
a concessory loan scheme for these airlines to help them
(08:25):
procure and lease aircraft. They do see room to add
aircraft to some of their routes and this would be similar,
to instance, to the announcement mister Bishop made yesterday about
concessory loans for ev charging infrastructure. It helps bring down
the cost of capital for these small businesses to allow
(08:46):
them to invest in the same way a large business
like New Zealand can with the rates that they're able
to get when they are looking to raise debt. So
there are rooms there for a little bit of growth
and to support the viability of these airlines long term.
Because an airline light Year CHETAMS, it needs to have
a number of routes operating in order to maintain that
(09:08):
critical route to the tetems. You can't just fly one. However,
does that mean more competition in the system? Look, I
think we have to be quite upfront that no airline
really is going to go up against a government owned
carrier on existing routes. It is not a viable prospect,
(09:28):
particularly for these small carriers. The one exception being Barrier Air,
who has been able to operate Auckland carry Carey up
against the New Zealand for a period of time so far.
So that is a really good news story. But we
shouldn't expect these small operators to be up for competing
with their New Zealand. They are too small and the
vulnerability they would feel going up against the government own
(09:50):
airline is just too much. It would have to involve
a big investment play to try and get a say,
a Quantus Group investment into New Zealand, to see anything
more dynamic happening in this market.
Speaker 2 (10:05):
They will only come in. Yeah, well it's worth a look,
but I think they'll only come in if they can
see a buck in it. Billy, Thank you so much,
Billy More, Chief executive of the New Zealand Airports Association. Interesting.
Speaker 1 (10:17):
For more from Kerry Wood and Mornings, listen live to
News Talks at B from nine am weekdays, or follow
the podcast on iHeartRadio
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