AIR - Air NZ.

[macduffy]

One million Chinese students stranded in America wishing to return home, one student saying she paid a travel agency $12,000 for an economy class ticket from Chicago to Xiamen.......... This may be the cost of FUTURE FLYING limited seats and high costs

Old Saying.......... User Pays

Just like the old days of aviation, eh? Before mass tourism!

[Beagle]

Interesting anecdote about the old days of flying and the cost. When AIR turned 75 years old on 30 April 2015 I was in Wellington to attend the Summerset annual meeting so stopped by at Te Papa afterwards to visit AIR's excellent exhibition commemorating their anniversary. Firstly the interior of the old flying boats was vastly more spacious than you would expect and standard economy seats put the new business class seats of the Dreamliners on display to shame.

The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.

What I find most curious about the airline industry that gives a valuable insight into the pervasive culture of growth and expansion and ego driving it, is that as soon as some new technology or fuel efficiency measure comes available, airlines pass all the savings on to customers in their ravenous attempt to grow. Prices like $1,599 return to Europe on a quality carrier really are absurdly cheap.

Will this sort of pricing ultimatly be a thing of the past ? I doubt it. In time the same grow at all costs that seems to be all pervasive and endemic within the ego's of airline CEO's worldwide will raise its ugly head again. It seems the industry itself is systemically flawed so in terms of ever expecting long run return on equity commensurate with the risks involved, the sector is forever destined to be an underperformer. No doubt Warren Buffet is coming to the same conclusion after his very costly exercise in irrational exuberance.

[blackcap]

The interesting parts was the warm jackets and scarf's you had to wear to withstand the cold at altitude but most interesting was the cost. It took half a years average income to afford the 9 hour one way journey to Sydney. In today's dollars that would be something like $25,000 one way.

.

What I find interesting too is that when my grandmother used to come here in the 80's it would cost her about $2,500 for a return flight to Europe. You make some real good points there Beagle about the cost and subsequent discounting of flying. For her back then it really was a matter of saving hard for a lot of years to even be able to make the trip. In my lifetime a return trip Europe has gone from being a half years salary to a fortnights salary.

[macduffy]

Is it a matter of growth at all costs or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yes, the AIR exhibit at Te Rapa was first class, including the virtual reality aspect. Just about the first use of that technology in NZ, I would think.

[stoploss]

Is it a matter of growth at all costs or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yes, the AIR exhibit at Te Rapa was first class, including the virtual reality aspect. Just about the first use of that technology in NZ, I would think.

Was that Pegasus air ?

[Cyclical]

...or fear of being competed out of the market? Seems to me that competitors would pounce quickly on any routes where the incumbent didn't react to cost reductions.

Yeah, hence my point above about AIR needing to take this opportunity to reset and make themselves lean and mean. If they continue to be fat, the Aussies (or someone else with cheap planes and labour) will be back in to put pressure on AIR's domestic monopoly quick smart. If AIR are going to be "mainly a domestic airline" going forward, than they can't afford tough competition.

[stoploss]

Yeah, hence my point above about AIR needing to take this opportunity to reset and make themselves lean and mean. If they continue to be fat, the Aussies (or someone else with cheap planes and labour) will be back in to put pressure on AIR's domestic monopoly quick smart. If AIR are going to be "mainly a domestic airline" going forward, than they can't afford tough competition.

If they had a 'monopoly" nobody would be able to compete ... It's not beyond comprehension that the Govt says we have had enough of people like Virgin & Jetstar pulling up stumps when the going gets tough .
Then all they have to do is not issue them with a license to operate ...

[steveb]

If they had a 'monopoly" nobody would be able to compete ... It's not beyond comprehension that the Govt says we have had enough of people like Virgin & Jetstar pulling up stumps when the going gets tough .
Then all they have to do is not issue them with a license to operate ...

then of course the aussie govt retaliates by pulling AIR's license and on and on it goes

[dobby41]

then of course the aussie govt retaliates by pulling AIR's license and on and on it goes

Does AIR have a license to operate WITHIN Aus?

[steveb]

Does AIR have a license to operate WITHIN Aus?

I know they fly sydney to perth ( there is a flight leaving this a.m in fact).Probably have other routes as well.So I guess they must have a licence,otherwise Aus would be a free for all!