Avalanche of new proposals awaits sifting by Govt

Press, 20 February 1979, Page 3

Avalanche of new proposals awaits sifting by Govt

By

LES BLOXHAM,

travel editor

The new North Pacific fare packages submitted by airlines to Government aviation officials in Wellington and Washington for approval incorporate at least 70 different rates for flights between Auckland and Los Angeles.

They vary from a low-sea-son budget return fare of $430, to $2350 for an unrestricted first-class ticket for a round-trip flight. Until now a basic range of eight fares applied on the same route. They were the same on all airlines, and were available at all times of the year. The Civil Aviation Division of the Ministry of Transport in Wellington has received fare applications from three lines — Air New Zealand, Pan American, and U.T.A.-French Airlines.

Continental, which plans to extend its services from North America to the South Pacific region in May, has so far filed its application only with the Washington authorities, but it is believed that the fares proposed for southbound travel will be close to those the airline hopes to offer from Auckland on its three flights a week to Honolulu and Los Angeles.

The immediate problem facing departmental officers in Wellington is to boil down the various fares submitted into a common package of rates that will be acceptable to all parties. The Deputy Secretary of Transport (Mr A. J. Healy)

has already indicated that the Ministry intends to bring the fares on to an equal footing, so that the only competition between the airlines will be in the service they provide. Adjustments across the board will probably be needed to reach equality. In some instances Air New Zealand’s proposed fares might have to be lowered, or those planned by the other airlines raised.

The Ministry is determined to make sure that the fares are the same. Mr Healy believes that the public will be better served by equal fares and said in an interview on Friday that no airline could afford a price war.

If an Atlantic-type price battle did break out, the odds would favour the much larger American carriers. For instance, Pan American announced last week a record profit of SUBM for the year ended December 31, an increase of 155 per cent on the 1977 return. The airline’s turnover exceeded two billion dollars last year for the first time. Air New Zealand’s much smaller activities returned a profit of $5.5M in the last financial year, a drop of 53 per cent bn its exceptional return in the preceding year.

U . T . A .-French Airlines does not want to become • embroiled in a price war ■ either, and it is interesting > to note that its fare application includes, mostly, the ’ same rates proposed by Air ■New Zealand.

U.T.A., which flies DClOs twice a week to Los Angeles, via Papeete, has also steered clear of seasonal travel. The only individual excursion fares planned are in line with Air New Zealand’s high-season rates, which U.TA. will offer on a year-round basis.

According to a reliable source, the airline found the low-season fares unacceptable and believed that it would have been unable to maintain its standard of service at those levels. The airline, in fact, would have been happy to see the status quo retained — budget and Epic fares continuing all year at present rates. The task which now faces the Ministry is not only to unravel the tangle of suggested fares, but to examine the implications of the differing seasons over which the new rates would apply. Air New Zealand has simply based its package on a two-tier system of high and low seasons, while Pan Am and Continental (in Washington) iiave proposed an additional “shoulder” season. However, the three airlines have also built into their systems a range of split-season fares where round-trip travel runs into two different periods. This type of fare would be half the sum of the two seasonal rates.

A passenger who, for instance, flies from Auckland to the United States with Air New Zealand on a high-

season budget fare in April and returns in the low-sea-son month of May will pay $604.50. During the same time Pan Am would be into its shoulder rate for northbound passengers and low season rate for the return journey. Its split-season fare would therefore be $545. These combinations will give the two American carriers a range of six fares for each type of low-rate travel over a year, compared with Air New Zealand’s proposed three.

The Ministry might be confronted with a further complication if Continental’s New Zealand filing follows the same lines as its Washington application. The airline has based its lowest fares on a 30-day advance purchase rate from America, which would entitle passengers to a confirmed seat at the time of booking.

Air New Zealand and Pan Am, on the other hand, have based their lowest fares on the Budget system where passengers nominate? the week in which they wish to travel. They must pay the fare at the time of .application (at least 21 days in advance) but they are not

advised of the actual day of travel by the airline until a minimum of seven days beforehand. While there ■ seems little doubt that Wellington will impose a schedule of equal fares for travel from New Zealand to the United States, southbound travel might be entirely different. President Carter’s “openskies” policy is forcing airlines in the United States to complete at rock-bottom prices, and Washington and Wellington might eventually have to settle on a country-of-origin agreement. If that were the case, fares from the United States could be cheaper than those applying in the other direction from New Zealand.

The following table shows the variation in some of the fares proposed by Air New Zealand and Pan American for flights from Auckland to Los Angeles, and Continental’s rates from Los Angeles to Auckland. The list does not include the airlines’ rates for group and individual tour packages. . (Abbreviations: ANZ, Air New Zealand; PA, Pan American; Con, Continental;

L, Low season; S, shoulder period; H, high season; Bud, budget rate; A(35), Apex rate with advance purchase requirement in days in parenthesis; O/w, one way; E/r, restricted economy; E, economy; F/r, restricted first class; F, first class.)

All fares are subject to 10 per cent travel tax. The rates above do not include Air New Zealand’s specially reduced fares for Christchurch and Wellington passengers connecting with its international flights at Auckland.

ANZ Bud PA Con Bud A(30) L .. 458 430 442 S —~ 660 642 H 751 800 728 O/w .. 398 (all year) A(35) A(35) A(14) L . 656 550 547 S —— 750 747 H 901 898 833 A(7) O/w . . — — 464 (Fares below all one-way) Er .. 660 645 —. E .. 707 695 516 Fr .. 1050 1000 F .. 1175 1174 811