Air New Zealand is charging premium New Zealand passengers up to double the price to fly to North and South America as their Australian counterparts.
Research by MoneyHub, an independent site that reviews consumer products, found that travellers flying from Australia via Auckland on the airline will pay far less for the same flight if it was taken from New Zealand.
Newsroom compared flights booked on airnewzealand.co.nz and the airline’s Australian website and found several examples of the practice.
In one instance, a business class ticket on Air NZ from Sydney to Buenos Aires transiting through Auckland in June costs NZ$4347 when booked on airnewzealand.com.au, while a ticket on the same flight to Buenos Aires embarking in Auckland is $8365 on airnewzealand.co.nz.
“Thank goodness Air NZ is New Zealand owned and that extra profit comes back to us.”
Premium economy tickets also have similar markups, while economy tickets for both countries are similarly priced.
Air NZ competes with several other airlines on the Australia-Americas route but holds a monopoly on flights departing to the continents from New Zealand for most of the year.
Sue Chetwin, chief executive of Consumer NZ, was surprised at the price difference.
“I suspect that is to get more Aussies on it and they’ll argue that’s competition but I definitely think it is unfair, it is unfair because here it’s been billed to us as ‘hey, we’re opening up South America for you, here’s a direct flight’.”
Tim Hazledine, a professor at Auckland University’s business school, described the price gap as “very striking” but said he was not surprised.
Corporate travellers could often access cheaper fares through booking agencies and he noted that flights on Air NZ to London departing New Zealand on the same dates were cheaper than flights originating in Sydney.
“Those numbers are fairly extreme but they’re definitely real numbers. They have their reasons, I don’t think they’re asleep on this.
“Thank goodness Air NZ is New Zealand owned and that extra profit comes back to us.”
MoneyHub also highlighted location pricing practices of a different sort, with domestic flights priced up to five times higher depending on which country they were booked from.
A comparison of flight prices on airnewzealand.co.nz with those on the airline’s United Kingdom, Australian, and Singaporean sites revealed stark price differences.
For one Auckland to Queenstown return flight in June, the price when booked within New Zealand was NZ$188 compared to $494 if booked on airnewzealand.co.uk.
The same flight cost $292 when booked through airnewzealand.com.sg.
Hazledine said local travellers were often more price sensitive than tourists booking an expensive trip.
While some travellers may not know they were paying extra, it meant that New Zealanders had access to cheaper flights.
“It’s because they’ll pay, which means you and I can get to Queenstown for less.
“The reality is that less than half of all customers we carry to the USA every day commence their journeys in Auckland … and we need to compete hard to attract that traffic.”
“That’s how they work, it’s quite common for someone sitting in a seat to be paying twice as much as the person sitting next to them … if you charged everyone the same price we wouldn’t be getting $8 flights from Auckland to Christchurch, they’d be $300.”
Air NZ responds
Kelly Kilgour, the airline’s external communications consultant, said prices would always vary between markets for a range of reasons including demand, currency fluctuations, and competitor pricing.
In Australia, Air NZ competed with five other airlines offering direct travel options to North and South America.
This meant it had to offer different prices than paid by New Zealand customers in order to attract Australian passengers, as the long-haul routes would not survive without international travellers.
“For example, we operate double daily Boeing 777-300 services between Auckland and Los Angeles. Air NZ needs to sell a significant majority of these seats every day for the service to be commercially viable,” she said.
“The reality is that less than half of all customers we carry to the USA every day commence their journeys in Auckland … and we need to compete hard to attract that traffic.”
Regarding domestic flight prices on international sites, Kilgour said these were also subject to factors such as localised sales. Customers who bought a domestic fare in addition to their international fare to New Zealand would pay less.
These types of location-based charging are not the same as dynamic pricing, which can potentially let companies set prices based on internet browsing history and previous purchases.
Air NZ would not say if it uses dynamic pricing on its New Zealand site.
