The great trans-Tasman flight fizzer

In 2009, the Australia and New Zealand goverments said flights between the two countries would be reclassified as domestic routes. Since then, nothing's happened.
In 2009, the Australia and New Zealand goverments said flights between the two countries would be reclassified as domestic routes. Since then, nothing's happened. Photo: Bloomberg

I must admit I’m quite naive sometimes: I took politicians at their word in 2009 when they promised revolutionary changes to air travel between Australia and New Zealand that would slash trans-Tasman airfares by around 30 per cent, triggering a huge increase in the number of people travelling between the two countries.

I couldn’t see that the opposite was about to happen: not only would the politicians renege on their promise, but they would increase our sky-high travel taxes that would further hamper Australia-New Zealand travel.

Since Australia and NZ are English-speaking neighbours with much in common, the idea has been around for two decades to change the  trans-Tasman air travel to domestic status, resulting in big savings for airlines and travellers alike.

Travellers would no longer have to pay the onerous Australian international passenger movement charge (PMC) and airlines would be able to process trans-Tasman flights through their Australian domestic terminals with much lower airport fees.

Former Jetstar chief executive Bruce Buchanan became the idea’s enthusiastic champion.

"If you want an economic stimulus package and you want to drive tourism in the current environment, I can't think of anything that's going to drive a greater increase in passenger movements," he told me in 2009 as the airline business struggled to recover from the global financial crisis. "And if we want to bring the two countries closer together in terms of trade and economic integration, this is a great thing to do.”

Buchanan said the savings for the airlines would be about $60 per passenger one-way, reducing typical trans-Tasman fares from around $200 to $140 – the same as comparable domestic routes in Australia like Melbourne or Sydney to Cairns.

It would “just change the whole psyche of the trip”, Buchanan enthused. “You know the hassle of going to an international airport and all the crap you've got to go through to get through. But this would be a domestic terminal, 30-minute close-out, rock straight through and you're on your aircraft.”

Buchanan foresaw a raft of new trans-Tasman “city pairs” including regional destinations on both sides of the ditch, with places like Canberra and Newcastle receiving services and the resumption of trans-Tasman flights to other cities like Hobart and Townsville.

"Because of lower costs, you can stimulate new markets with lower pricing,” he said. “That means more markets like Newcastle-Auckland or Newcastle-Christchurch become viable because you don't have to have the high fixed costs of international travel built into the system.”

On the political level, there was much back-slapping and hand-shaking between New Zealand Prime Minister John Key and Australia’s Kevin Rudd with visions of the social revolution that would ensue.

And then ... nothing happened. And nothing has continued to happen for another three years. I have been told the Kiwis were keen for the reclassification of trans-Tasman flights as domestic air services to proceed but the problem was at the Australian end.

Well, who would stand to lose tens or hundreds of millions of dollars if the Tasman suddenly became a common domestic sky? Of course! Australia’s privatised airports.

It reminded me of the furious lobbying at around the same time to prevent Melbourne’s Avalon Airport receiving federal government permission to begin receiving international flights – a process that’s still bogged down in red tape. As a result of that decision, the airport lost what are now up to double-daily flights to Kuala Lumpur with AirAsia X, which had been a strong supporter of Avalon’s development as a low-cost airport.

Since then, Canberra has continued to treat travellers as a cash cow, increasing the PMC a further 11.7 per cent to $55 for all international travellers entering or leaving the country.

That makes it the world’s biggest travel tax for short-haul international routes, exceeded only by the UK’s punitive Air Passenger Duty (APD) of up to $A142 per head for long-haul travellers.

And, as for the development of new trans-Tasman routes, the tax and airport charges regimes continue to make them unattractive. The only new year-round route developed in the past three years is a twice-a-week service between Sydney and Rotorua.

Air New Zealand is still struggling with its new Auckland-Sunshine Coast flights, which were operated twice a week this winter as a seasonal service. There is still not enough demand to operate them year-round.

The Australian Travel and Transport Forum (TTF) is pleading with Canberra to cut the PMC, noting that in the first month of the new $55 charge (combined with NZ’s $NZ25 departure tax), travel between Australia and NZ – collectively Australia’s busiest international air corridor – fell 4.5 per cent in July.

Would you like to see new options for travel between Australia and NZ? Are there still trans-Tasman routes that are too expensive? Do you live in a regional city that could do with a new connection to NZ?

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