Nicola Willis set to meet with Air NZ, ‘open to’ market study

Tuesday, 6 May 2025

Finance Minister Nicola Willis is the Crown shareholder of Air NZ.

The economic growth and finance minister is “open to” a market study as Air NZ faces scrutiny of its airfares.

Nicola Willis said she was meeting with the airline this week “and this is an issue that I will be raising with them to ensure that they are listening to the concerns of New Zealanders and to hear what they are going to do to keep those prices affordable in the medium term”.

The Government has a 51% shareholding in the airline, which Willis is responsible for.

Recent long weekends brought sharp focus to the airline’s airfares, and a complaint to the Commerce Commission by one parent who discovered it was cheaper to fly to Los Angeles than pay for his student daughter to return from Tauranga to Wellington.

Reduced routes - including the recently canned Invercargill to Wellington flight - has also prompted outcry from travellers.

PM Christopher Luxon, a former Air NZ CEO, says running an airline is tough post-Covid, but expects reliable, affordable service. He still checks ticket prices himself and says there’s “no” plan for a ministerial private plane.

Have you been affected by Air NZ ticket prices? Email kelly.dennett@stuff.co.nz

Last week Commerce Commission chair Dr John Small ruled out a market study, saying that was not an effective way of driving stronger competition. Commerce Minister Scott Simpson told The Post that decision was “appropriate at the moment” but he was watching the issue closely.

He said people needed to make choices about how they travelled, including driving, flying, “or what other method of transport is available to them”.

The Government could order a study - Willis said her “read” was the Commission didn’t see enough significant issues with the airline to warrant one, but “it’s something I’m happy to keep my mind open to”.

“I’m mindful of the Commerce Commission’s independence, which is protected in the statute, so I would be loath to intervene in the judgement they’ve made there,” Willis said.

However, “for my part, as a shareholding minister, I have an ongoing expectation that Air NZ work to ensure it has not only a good network of routes but that it’s providing air services at a reasonable cost.”

Air NZ is facing scrutiny over its air fares.

She would be talking with Simpson about the issue, and meets with the chair and chief executive of Air NZ several times a year to understand how the business is performing, and how they are meeting the Government’s expectations.

“I am advised by Air NZ that there are a large number of factors impacting how fares are set, which include rising costs faced by transport providers,” she told The Post.

“I regularly challenge Air NZ on the quality and pricing of its services as part of the Government’s wider focus on economic growth and improving the cost of living for all New Zealanders.”

Labour leader Chris Hipkins said the Government’s position had been “pretty weak”.

“I think it’s a fair question as to whether Air NZ are charging a fair price to New Zealand consumers given the lack of competition in the airline industry in New Zealand.”

He was “very open” to the idea of a market study on Air NZ.

Simpson said he spoke regularly to Air NZ chief Greg Foran and its chair, and “they are very aware of the social licence implications of the current ticket pricing issues that they have.

“It’s a complex issue that I think needs to be addressed by Air NZ…[Air NZ] understand the pressure.

He added: “People need to make a choice about whether they fly, drive or what other method of transport is available to them… if you leave your ticket-buying decision until the last minute, Air New Zealand’s dynamic pricing, it’s expensive. That’s Air NZ’s decision about how they price their ticketing.”

While he had statutory levers available to him to intervene, “We’re not anywhere close to… implementing any of those at this stage.”

Air NZ has blamed its prices on inflation and the Covid-19 pandemic, and has rejected suggestions of price gouging. Its costs had risen by 30% in three years and it had had to take that into account in its ticketing.

John Small previously said the Commission believed economic and structural factor were the main driver of the domestic airline market’s challenges, including limited competition.

“This is a point-in-time assessment, and competitive conditions change. We will continue to monitor the domestic airline sector closely. If we see activity that falls foul of the laws we enforce, we will not hesitate to act. We will also continue to provide independent advice to the government on policy matters.”