The benefits of competition

For one day at least, a limited number of Air New Zealand fares to and from Dunedin plummeted more precipitously than a stock market crash. Those lucky enough to be plugged into the airline's online early warning system on Thursday suddenly found this city - so often overlooked in the "grabaseat" goodies - featuring extensively at what can legitimately be described as "giveaway" prices.

Tickets were advertised between Dunedin and Christchurch, Wellington, and Auckland at $1 a piece - and quickly snapped up.

Further tickets for August and September for the trip between Dunedin and Auckland were notified at $49 each way. For business and leisure travellers, southern companies and city institutions used to having to pay for short-notice travel as much to get to Auckland as it routinely costs to travel to Australia, this was a welcome sign. But it was also once again evidence of how essential it is for there to be competing interests operating out of Dunedin airport and servicing our major domestic routes.

It was no coincidence the fares went on offer on the same day rival Jetstar was launching its daily Dunedin-Auckland service, with its own raft of giveaways: $5 fares between noon and 1pm, and $49 up until midnight. As such, Air New Zealand's gambit might be regarded as a cynical and short-lived "spoiling" ploy, but the reality is that with two airlines now servicing the same route - a route with a regular but finite clientele - it might be expected there will be a heightened degree of price sensitivity on the part of both.

Not before time. Dunedin, as one of the country's major centres, has long languished seemingly at the bottom of domestic airline priorities: services have been increasingly cut or downgraded - the number of jets landing and taking off from the runway on the Taieri is much reduced compared with even a few years ago - and the fares seem to have risen at the same time.

It is not just perception that has had business interests and the general public crying foul over the declining service in and out of the city while, by contrast, that into Queenstown has gone ahead in leaps and bounds - domestically and internationally. This has rightly been seen as having an impact on the performance of the local economy, being one of those infrastructural factors which, improved, might significantly enhance efficiencies and costs.

As Otago Chamber of Commerce chief executive John Christie noted in this newspaper yesterday, it is frustrating that Air New Zealand has acted only when competition has been introduced.

The arrival of Jetstar with its daily service to and from Auckland is a welcome boost. Not only will it continue to impact in a positive way on the cost of travel to Auckland and back - facilitating business growth between the two centres - but the service may herald expansion into other routes: Christchurch and Wellington for example. It is timely because with the Rugby World Cup this year, travel to and from the city is likely to increase dramatically in the spring.

And the drawcard of Forsyth Barr Stadium for major events - of which it must hoped the Elton John concert is but a forerunner - should not be underestimated. The prospect of a weekend in Dunedin - perhaps including an international act, a round or two of golf, fine dining, surfing, fishing, a night at the theatre, a trip around the galleries - becomes so much more attractive to people from other major centres if air travel is more frequent and competitively priced.

While there is no firm evidence to date to suggest this is the case, it may be that Dunedin's attraction as an international gateway to the southern part of the country has been enhanced by the continued aftershocks and visitor jitters afflicting Christchurch.

It is not a matter of taking advantage of the misfortune of our northern neighbours; rather of being prepared, and providing the wherewithal, for market forces to act in such a way that Dunedin and the rest of Otago benefits. Lower airfares and improved air services into Dunedin can only help.

 

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