THE PRESS THURSDAY, FEBRUARY 16, 1984. Air fares in a bind

Press, 16 February 1984, Page 16

THE PRESS THURSDAY, FEBRUARY 16, 1984. Air fares in a bind

The Government has been trying since 1978 to control by regulation the sale of international air fares in New Zealand. It has not succeeded. Instead, its attempts to regulate the industry have left airlines, tour wholesalers, and travel agents in a state of confusion; they have nurtured a flourishing black market in discounted fares; and have created frustration and resentment among New Zealanders planning overseas trips. The Government’s intention is to enforce a uniform scale of fares, conditions, and commission payments. The legislative measures designed to effect these controls have been futile.

For five years, the Ministry of Transport, which is responsible for the administration of international aviation policies in New Zealand, attempted to hold in check airlines, tour wholesalers, and travel agents under the International Air Tariff Regulations, 1978. These were intended to prohibit the sale of any fares not approved by the Government, and to deter people from seeking cheap fares available in other countries.

Travel agents were, for instance, banned from selling, advertising, or promoting unofficial fares. A Government inspector was appointed to check for illegal tickets at airports. Travellers were warned that tickets showing unapproved rates would be deemed invalid for travel, and that the issuing travel agent and airline would be liable to prosecution.

All this appears to have been a bluff, even if it was an unintended bluff. The Ministry did not have the teeth necessary to make the law bite. The regulations contained, by the Ministry’s own admission, a “fatal flaw” in not prescribing the manner in which approved tariffs should have been promulgated. The result of this was that travel agents who ignored the law’s intent did so with impunity; and those who exercised restraint lost clients to the others.

The ineffectual regulations were revoked last July and were replaced by a more substantial bulk of legislative machinery, the Civil Aviation Amendment Act, 1982. This provides for the issue by Order-in-Council of fare-pricing rules, conditions, and commission regimes. Its mechanism to control fares appears to have ground to a halt. The act requires that all fares will be approved by the Minister of Civil Aviation and that notice be given in The Gazette. In anticipation of receiving these notices, airlines and agents eight months ago paid a first annual fee of $229 each. To date, they have received only two Gazette notices covering two fares, a binder for the estimated hundreds of fare regulations yet to come, and a sheet containing detailed instructions explaining how to work

the binder. The two Gazette notices already issued run to more than 4000 words of legal terminology aimed at controlling the level, sale, and conditions of first-class fares to Los Angeles, and of excursion-type fares to Australia. Hundreds of Gazette notices of similar length have yet to be drawn up and printed if the Ministry’s second attempt to control the market is to be enacted. Then might follow thousands to cover the possible fare combinations for world-wide travel that agents put together as a matter of routine, together with the constant flow of amendments to legalise changing fare levels. The Government Printer’s task is obviously daunting, if not impossible. The delay since the publication of the first Gazette notices suggests that the Ministry might have acquired its new legislative teeth to bite off more than it can chew. The Government’s intention behind this impending avalanche of paperwork is, principally, to protect Air New Zealand from competition from bigger international airlines in an open, discount market in its home territory. Nevertheless, Air New Zealand appears to be competing successfully in the unrestricted markets of other countries. In Australia, which, like Britain and a number of European and Asian countries, has failed to retain a wholly regulated market, Air New Zealand has come out as a leader in offering fares at a discount for travel to the United States and London. The Minister of Civil Aviation, Mr Gair, and his Ministry are facing a serious loss of credibility because of their failure to get their regulations to work. Before sinking the industry in more turmoil, and taxpayers in further expense, the Government should consider withdrawing as speedily and graciously as possible. Air New Zealand is old enough and sufficiently robust to face competition in an open market at home as well as abroad. It is probably losing some business at home because of discounts found overseas. Controls to ensure stability in air fares might seem desirable; but it is unlikely that airlines would become embroiled in any interminable price-cutting war. Without regulation, the marketplace would determine realistic fare levels that would leave neither consumers nor airlines at a disadvantage. New Zealand taxpayers, who helped to support Air New Zealand during its years of financial difficulty, more than ever deserve access to the range of discounted fares offered to travellers in other countries by international airlines — including Air New Zealand. An open market is the only avenue available to a Government which appears unable to devise sensible, simple and fair regulations to control air fares.