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Air NZ Unveils Bold New Era in Low Cost Fares

Air New Zealand Unveils Bold New Era in Low Cost Fares

Wed 31 July 2002

Air New Zealand has slashed domestic air fares by up to 50 percent on some routes as part of the new Air New Zealand Express Class, it was announced at a special function at Auckland Airport today.

Announcing details of the "compellingly lower" fares, Air New Zealand's Managing Director and Chief Executive Officer, Ralph Norris, said the airline had responded to customer demand in delivering a range of fares which not only showed dramatic discounts on current fare levels, but were strongly competitive with rail and car travel. "Today's announcement on fares represents the most significant fare reduction programme yet undertaken by Air New Zealand across its domestic services," said Mr Norris. Average fares across the Air New Zealand domestic network will decrease by 20 percent, and by about 28 percent on main trunk routes. "Our promise is that twice as many fares will be sold at the lowest prices - our objective is to encourage people to fly." "These new low fares are possible because of fundamental changes we have made to our domestic network," he said.

These changes include:

* Increased seat capacity of 737-300 jets

* The introduction of a "no-frills" in-flight service as requested by customers * The favourable re-negotiation of aircraft leases

* A programme to reduce the airline's cost of selling air fares, including the elimination of travel agents' base commissions on domestic fares sold in New Zealand

* An expected stimulation of the market in terms of passenger numbers resulting from the lower fares Mr Norris said the new fare levels such as (examples) not only make domestic air travel far more accessible to more New Zealanders, but they also make flying the most realistically priced transport option within New Zealand. He pointed out that a family of four (two adults and two children) could all fly from Christchurch to Wellington return from $272 plus levies and surcharges. Three distinct fare categories - Smart Savers, Flexi Savers and Fully Flexi - will be introduced, each with specific fare conditions and varying levels of savings. In all three categories, the lowest fares will only be available by booking on-line, through Air New Zealand's upgraded website ( Mr Norris said that this approach reflected the airline's focus on driving fares down to the lowest possible levels by eliminating service costs.

"For those who still want personal service, bookings can be made through our Call Centres, Air New Zealand Travel Centres, but service charges will apply.

Fares will also be able to be booked through travel agents" Mr Norris said the new fares will be available from 1 November, 2002 and bookings can be made from today (31 July, 2002) Examples and comparisons of main trunk base fares, excluding levies and surcharges, are given below: Express Fares (All one way) AKL-WLG Lowest Smart Saver = from $59 one way; AKL-WLG Lowest Flexi Saver = from $119 one way; AKL-WLG Lowest Fully Flexi = from $199 one way; AKL-CHC Lowest Smart Saver = from $69 one way; AKL-CHC Lowest Flexi Saver = from $139 one way; AKL-CHC Lowest Fully Flexi = from $249 one way; WLG-CHC Lowest Smart Saver = from $39 one way; WLG-CHC Lowest Flexi Saver = from $89 one way; WLG-CHC Lowest Fully Flexi = from $149 one way. Old fares: (All return) AKL-WLG Lowest published = from $199 return; AKL-WLG Mid-range = from $377 return; AKL-WLG Standard economy = $776 return; AKL-CHC Lowest published = from $249 return; AKL-CHC Mid-range = from $482 return; AKL-CHC Standard economy = $1032 return; WLG-CHC Lowest published = from $137 return; WLG-CHC Mid-range = from $283 return; WLG-CHC Standard economy = $592 return.


The most significant savings would be made on main trunk domestic routes operated by Air New Zealand's Boeing B737-300 fleet. These routes will enjoy the deepest fare savings because capacity can be increased using the same aircraft and costs can be lowered by reducing the level of in-flight service. But the provincial regions will also benefit from fare reductions of up to 20 percent and on average about 10 percent. "Equally importantly," says Mr Norris, "there's more good news for the regions in that our strategic review of the domestic network has confirmed that current frequencies and capacity will be maintained. "And we expect the lower fare structures to have a very positive effect on the numbers of people travelling domestically, providing a boost for regional tourism and local economies."


Mr Norris said the Air New Zealand Air Points reward programme will remain a key part of the airline's service to customers.

"A great deal of work is going on to refresh the programme to better reward frequent flyers, including more points-earning opportunities on the new Express service. Air Points redemption opportunities will be enhanced with currently scheduled international service expansions," he said. A range of new Air Points programme initiatives will be announced in a few weeks time.

Mr Norris said the airline's new fare structures enabled customers to choose a range of fares attracting different terms and conditions, including the cheapest 'Smart Saver' fares which will not attract Air Points.


Mr Norris said work continued on other aspects of the new Air New Zealand Express Class, to be launched domestically on 1 November,2002. Business class seating will be removed from Air New Zealand's B737-300s and there will be no inflight meal or alcoholic beverage offering. A new inflight snack service - including tea, coffee and water, will be provided on all Air New Zealand Express aircraft.

With the removal of business class, Air New Zealand Express aircraft will be fitted with 136 seats, compared to 122 at present. Work has also begun on the upgrade of Auckland's Koru Club lounge which will offer better seating arrangements for working business travellers. Mr Norris said the 'Express' class changes demonstrate that the airline had moved quickly and decisively to respond to clearly expressed consumer demands. "All of the elements which we have improved and enhanced are those which our customers have told us matter most. A tremendous amount of work has already gone into reshaping our domestic operations, and over the next 18 months we will turn our attention to a similarly rigorous programme for the trans-Tasman, and international long-haul operations of the airline."


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