Jetstar axing regional routes means higher prices even if Air NZ doesn't charge more - expert

A travel industry spokesperson says Jetstar pulling out of servicing New Zealand's regional market will definitely mean more expensive airfares, but not because of price gouging.

Air New Zealand will be the sole operator on some of the routes Jetstar is dumping, leading to fears of greedy price rises from the national carrier and even an unsubtle threat from Regional Economic Development Minister Shane Jones.

But House of Travel Commercial Director Brent Thomas says airlines pulling out of routes simply means fewer cheap seats, even if Air NZ's current prices remain unchanged. 

On Thursday's The AM Show, he agreed it was "very much so" that Jetstar had "kept Air NZ honest".

"As we've seen over the years, the prices have come down because of the competition," Thomas said.

"That's what now is going to be missing, going forward... the average pricing is almost certain to go up."

However, he explained that the higher prices won't necessarily hit customers due to fare prices being raised. 

"Airlines have low airfares, but only a limited number of seats. So when there's two aircraft going, people can find those lower prices. As soon as the first, let's say, 10 seats at $39 each get sold out, you're then at $69, then $89, then $109. So what you're going to find is that people are not going to be able to find those lower-priced fares, so they will be paying more."

Air NZ has offered discounted airfares to Jetstar customers affected by the airline's announcement that it is planning to axe its regional services.

That may be because the business is thinking of its entire profits overall, rather than how profitable each individual route is.

"They have to look at it globally over all their different routes - if they didn't, you might not even have some of the flights that are operating today," said Thomas.

"There are always going to be some flights that are profitable and some flights that are not. They have to look at each one of those in totality."

Jetstar will stop operating its regional services at the end of November and is offering refunds to customers with flights booked after that time.

Newshub.

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