Air New Zealand has quietly increased some domestic airfares on a number of regional routes by around 50% as part of changes to revenue management systems which occurred last month.

Passengers booking flights across a number of domestic regional routes have the option of flying direct, or flying via Christchurch, Wellington or Auckland. A few such examples include Christchurch to Nelson (available direct or via Wellington),  Tauranga to Christchurch (available direct, via Auckland, or via Wellington), Wellington to Rotorua (available direct, via Auckland, or via Christchurch), Wellington to Tauranga (available direct, via Auckland, or via Christchurch), and Wellington to Gisborne (available direct or via Auckland).

Direct and indirect flights are also available on a number of other routes, and should not be confused with routes that only have indirect routing available such as Wellington to Taupo or Wellington to Whangarei that are only available via Auckland.

These flights have historically been priced on what is known as an 'O&D basis' (origin and destination)  - you paid the same price for a flight from Wellington to Rotorua whether you flew direct or flew to Rotorua via Auckland. The only requirement for the Air NZ booking engine to price the fare was that you needed to have the same booking class available on both flights, a concept known as a married fare. This meant that there could be seats available on say a Rotorua to Auckland flight and a Auckland to Wellington flight, but if the same fare class (ie H, M, B, Y) was not available on both flights, you could not book this as a single journey.

Air New Zealand have now moved to price flights on a number of indirect routes at a higher price than direct flights - but what will come as a huge shock to many (myself included) is that they've hiked fares of indirect fares by around 50% in the process.

Here are a few examples

CHC (Christchurch) - NSN (Nelson) full Y fare direct $355. Full Y fare indirect via WLG $581

WLG (Wellington) - ROT (Rotorua) full Y fare direct $425. Full Y fare indirect via AKL or CHC $676

WLG (Wellington) - GIS (Gisborne) full Y fare $445. Full Y fare indirect via AKL $723

As you can see in the example below the full price Y fare on a direct WLG-TRG service is $430, with the full price Y fare via Auckland now priced at $665

 

Note that Y class is the full priced fare - the cheapest fare class typically available for indirect flights is S class, priced at $250 to fly via AKL, or $163 to fly direct. Prior to this change both direct and indirect S class fares would have been priced at $163.

As airfare pricing is a mystery to many people, those who don't fly regularly would have probably been completely unaware of the O&D pricing that existed previously. While most people would only ever book direct flights, the indirect flights increase capacity on a route and offer arrival and departure times that may be unavailable on direct services which makes them a popular option for many people.

Rotorua in particular faces a significant reduction in flights in early 2025 with the decision by Air New Zealand to cut capacity due to softening demand and reliability issues with its fleet of aging Dash 8 turboprop aircraft. Somebody wanting to head from Wellington to Rotorua for a full days work now needs to book flights both ways flying via Auckland, and along with the added travel times faces the reality of a 50% fare increase as well.

Air New Zealand are both cutting capacity on direct services which forces passengers to fly on indirect services, and also pay significantly more for those indirect flights.

Cost pressures are hurting Air New Zealand, and they have made no secret of this in recent times both at their AGM and recent investor day. Costs have soared, and while airfare pricing has gone up, it's not enough to cover the increased costs the airline is incurring. Other airlines are also hurting, with Sounds Air recently pulling out of flights to Taupo and Westport due to the inability to increase fares to cover costs on these routes.

Due to plenty of misinformation from the likes of Consumer NZ and media outlets who have reported many inaccurate claims surrounding airfares this year, many people genuinely believe that Air NZ are ripping everybody off and that airfares in New Zealand are some of the most expensive in the world (two thing that are wildly inaccurate and something I wrote about earlier in the year).

In light of public opinion it seems surprising however that Air New Zealand would actually increase a large number of airfares by 50%, especially when these increases are combined with frequency reductions on routes where customers may be faced with no option but to pay the significantly higher costs.