Ryan Bridge: Why ComCom's not investigating Air New Zealand

So, after all the handwringing, the complaints, the stomping of feet, the Commerce Commission's shooting down talk of an investigation into domestic airfares.

Greg Foran and Co. will see this as vindication - validation that, despite the headlines and Consumer NZ's claim the market is quote broken, the reality is their costs have gone up and, surprise surprise, it's expensive to run routes with high fixed costs to small places with few people. 

So they conclude doing a market study —which is easy politics, it scratches the itch— won't actually achieve anything. 

And they say it won't lead to consumers getting a better deal. 

Refreshing honesty. Could the same refreshing honesty not have been applied to the claims about banking/supermarkets/petrol stations, etc, etc, etc?

Like most things post-Covid, costs have gone sky high.

Airport landing charges - up.

Air traffic control - up.

Security levies - up.

And when you're a business, one owning to the tune of 51% remember, you recoup those costs by putting your own prices up. 

We don't want them subsidies flights and crashing our business, right? 

We sold off the national carrier in 1989. We re-nationalised it in 2001after Ansett went bust - that cost us close to a billion bucks. 

Ansett's problem was high costs and regulation changes - when airlines fail, it gets expensive for taxpayers.

Now I don't want to defend an airline charging me $400 to fly for 40 minutes anymore than the next guy.

But this is the crux of most of the complaints we hear about through the media. 

Short flights, regional flights are expensive right now and people don't use them often enough. 

They use more fuel as a proportion of total flight time because take-off and climbing is when you burn through it - it takes a bit of gas to lift us into the sky.

The cost of fuel is a third of operating cost —something Foran can't control— that's more the purview of a Putin or a Sultan.

Planes spend way too long sitting on the ground, your costs are higher, and you've got fewer passengers to spread those costs over.

Using jets would be more efficient but, again, we don't have the people to fill them. 

Which is why I said the other day —and it's true but doesn't make it palatable— we're a small country, we pay a price for sparsely populated, beautiful and untouched landscapes. 

The ComCom does say there's room for improvement, but on the whole, the real enemy here is the politician or talking head who tells us by simply bashing Air New Zealand's head into a wall, they can make Kiwis fly on the cheap.

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Episode Transcript

Speaker 1 (00:00):
So after all of the hand ringing, the complaints, the
stomping of feet, the Comcom's shooting down, talk of a
probe and to domestic airfares, Foreign and Co Will of
course see this as a vindication, a validation that despite
the headlines and consumer and z's, the market has broken claim.
In fact, the reality is their costs have gone up,

(00:21):
and surprise, surprise, it's expensive to run routes with high
fixed costs to small places with more sheep than people.
So they conclude doing a market study, which is easy politics.
It scratches the itch, won't actually achieve anything, and by
that they mean it won't lead to consumers getting a
better deal. Refreshing honesty. Could the same refreshing honesty have

(00:45):
been applied to the claims about banking and supermarkets and
petrol stations, et cetera, et cetera, et cetera. The list
goes on, Like most things post COVID, costs have gone up,
airport landing charges up, air traffic control up, security levees up.
And when you're in business and you own we own
this one, remember fifty one percent of it. You recoup

(01:06):
those costs by putting your own prices up. We don't
want them subsidizing flights and crashing our business, right, the
business we own. We sold off the National carrier in
nineteen eighty nine. We renationalized in two thousand and one
after Anset went bus that cost us close to a
billion bucks. Ansets problem was high costs and regulation changes

(01:27):
when airlines failure gets expensive for tax payers. Now, I
don't want to defend an airline charging me four hundred
dollars to fly for forty minutes any more than the
next guy. But and this is the crux of most
of the complaints we hear through the media. Short flights,
regional flights are expensive to run, and people don't use
them often enough. They use more fuel as a proportion

(01:50):
of a total flight because of the takeoff and the climb.
Takes a bit of gas to lift us into the sky,
especially now we're getting so fat. The cost of fuel
is a third of the operating costs for Air New Zealand,
something foreign can't control. That's more the purview of a
Poutin or a Sultan. Planes spend way too long sitting
on the ground. Your costs are higher, and you've got

(02:10):
fewer passengers to spread those costs over on the smaller
routes using jets, of course, that would be more efficient,
but again we don't have the people to fill them,
which is why I said the other day and it's true,
but doesn't make it palatable. We're a small country. We
pay a price for sparsely populated, beautiful, untouched landscapes. The

(02:32):
ComCom does say there's room for improvement, but on the
whole the real enemy here is the politician or the
talking head who tells us by simply bashing Air New
Zealand's head into the wall, they can make Kiwis fly
on the cheap. For more from Early Edition with Ryan Bridge,
listen live to News Talk Set B from five am weekdays,

(02:55):
or follow the podcast on iHeartRadio.