Air New Zealand is offering one way trans-Tasman fares for as low as $69 in an attempt to stimulate softening demand.
The airline’s chief revenue officer Cam Wallace said there was soft demand on routes like the Tasman.
“We now have some empty seats due to travellers mainly from Asian destinations not connecting between New Zealand and Australia.
As a result it was offering “ridiculously good deals” on one way flights across the Tasman such as Auckland-Melbourne or Christchurch-Melbourne for $69, and Auckland-Brisbane, Auckland-Sydney, Christchurch-Brisbane or Wellington-Sydney for $79, he said.
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Wallace said the fares were available until the end of Monday for travel from mid-March.
“Kiwis and Aussies are going to be able to head away for holidays or to see family and friends or do business for cheaper than a night’s accommodation at most hotels.
By comparison Virgin Australia and Qantas have $100 one way flights from Auckland to Melbourne in mid-March and Emirates has $107 one way flights on the same route.
Qantas has one way flights from Christchurch to Melbourne from $100 around the same time while flying Jetstar costs $125.
After Air New Zealand, Virgin Australia has the next cheapest Wellington to Sydney flights at $110 in mid-March.
Air New Zealand, Qantas, Jetstar and Virgin Australia have all recently reduced capacity across their networks, including on the Tasman, as a result of the coronavirus (Covid-19) outbreak taking a heavy toll on the international travel market.
The World Health Organisation says coronavirus has killed 2747 people and infected 78,000 and for the first time, since the onset of symptoms of the first identified case on December 8, there have been more new cases reported from countries outside of China than from China, where it originated.
New Zealand is yet to have a confirmed case of coronavirus and strict border controls are in place preventing visitors who have come from or travelled through mainland China from entering the country. Australia has similar border controls in place.
Wallace said, outside of Grabaseat deals, the pricing was “unprecedented” and he hadn’t seen such low airfares in 20 years.
It was important to fill empty seats on Air New Zealand aircraft crossing the Tasman in order to maintain its current schedule, he said.
“We want to keep our planes flying on the Tasman and this is a way to fill those last seats.”
Air New Zealand has reduced capacity on the Tasman by about 3 per cent and Asia by 17 per cent.
That meant it had extra aircraft capacity which it needed to fill, Wallace said.
It was looking to replace demand lost from the Asian market, due to coronavirus, with local demand, he said.
Before coronavirus demand on the Tasman had been “a little patchy”, in part due to a dampening effect the Australian bushfires had on the market, he said.
Aviation consultant Irene King said a $69 standard airfare was a “significant loss leader” but the alternative was a flight with empty seats.
“They’ve just got to get cash flow and get bums on seats,” King said.
She said people complaining about the cost of a return airfare should shop around.
“You will start to see a competitive response from Qantas.”
Such low fares generated a level of excitement in the market and low prices could also be reflected in accommodation providers feeling the pressure from a drop off in international visitor numbers, she said.
The business travel market could present some challenges for Air New Zealand with fewer companies sending their staff on business trips especially while coronavirus risks existed, she said.
“They’re going to lose that high end traveller for a period of time.”
On Tuesday the Board of Airline Representatives (Barnz), which speaks on behalf of 28 airlines that fly in New Zealand, said the cost of an economy ticket to Australia was made up of 23 per cent airport charges, 26 per cent Government taxes and levies, 4 per cent air traffic control fees and 47 per cent airline costs such as fuel.
It said the cost of landing in New Zealand was too high and, when combined with the impact of coronavirus, threatened visitor numbers and the success of the tourism sector.