Complaints of price gouging after Air NZ fares hiked over lockdown

Air New Zealand says its price hikes were because physical distancing requirements meant it could only sell about half a plane's seats. Photo: supplied

Air New Zealand's fares skyrocketed over lockdown when it was the only airline operating - the average cost of return flights from Auckland to Christchurch increased six-fold, new data shows.

Three complaints about price gouging have been made to the Commerce Commission and Cabinet Minister Shane Jones says the embattled carrier has an obligation to be more transparent because taxpayers gave it a $900 million "lifeline".

But Air New Zealand says its price hikes were because physical distancing requirements meant it could only sell about half a plane's seats.

Data from flight comparison site Kayak shows the average price of a return flight from Auckland to Wellington peaked at about $400 at the end of May when the country was in alert level 2.

In April, return flights from Auckland to Christchurch escalated to six times their February price.

At the time, Air NZ was the only airline flying because its competitor Jetstar grounded all flights from mid-March until July because the lockdown restricted travel and alert level 2 imposed social distancing regulations.

Jetstar again cancelled all its flights when Auckland went back into alert level 3 last month and the rest of the country to alert level 2. The low-cost airline said a return to social distancing meant its operation in New Zealand was "unviable".

A spokeswoman for Air New Zealand said keeping passengers distanced meant they could only sell just under 50 per cent of seats on a turboprop aircraft and 65 per cent on an A320.

"Once physical distancing requirements are removed we can return to offering our lowest lead in fares but in the meantime this isn't possible.

"However, it is also worth noting that we have capped our fares which means our highest fares are not currently on sale either."

The Commerce Commission has received three complaints about Air NZ which include the words "price gouging".

Jones, an NZ First MP and the Minister for Regional Economic Development, said it was his view New Zealanders should be entitled to greater transparency from the airline about how it justified the price hikes.

Especially given it "came to Wellington on all fours asking for assistance", said Jones, referring to the $900 million loan the Government offered the struggling airline in March.

In the reporting of its annual results last week, Air NZ said it expected to draw on the loan "in the coming days".

"It's always been my view that the bailout option represents obligations," Jones said.

"Why should Kiwis bail out Air New Zealand whilst Air New Zealand doesn't seem to be capable of providing competitive, justifiable fares to keep regional businesses, regional economies, regional communities solid."

"It's just not sustainable to think they're going to recover their historical operational model by gouging."

Jones has long-accused Air NZ of price gouging on its regional routes where it is a monopoly-operator and called the recent price hikes between the major cities a "tolling operation".

"Any Crown infusion in the future in New Zealand must clearly be linked to a higher, more transparent and fairer level of travel costs around New Zealand to keep Kiwis connected. That's the least the public should expect."

Consumer chief executive Jon Duffy said anyone who hadn't booked but was miffed by the prices couldn't do much about it.

However, there might be a case under the Fair Trading Act if someone had their flight cancelled and the airline claimed it was because of Covid-19, Duffy said.

If they believed the real reason was because the airline wanted to make them re-book a more expensive flight, then that would be misleading.