27 July 2017

Big Fish, Little Minnow, Overcrowded Pond

Australian carrier Jetstar should be investigated for selling fares below cost, sparking a race to the bottom that threatens smaller operators, a regional airline boss says. Sounds Air chief executive Andrew Crawford said since Jetstar started flying from Nelson Airport, in December 2015, the Marlborough airline had seen a significant drop in business in Nelson. Crawford said Nelson Airport had been the second biggest market for Sounds Air. It was now the sixth, and the company was making $60,000 a month less than it was two years ago. "Jetstar has come into this country and offered fares at ridiculous levels, I mean way below cost. They're offering fares that I believe the Commerce Commission should be putting a stop to," Crawford said. "It's absolutely decimated our market in Nelson to the point where we'll have to seriously consider if we can keep doing it ... it's a race to the bottom, and we're caught up in it." Crawford made the comments at a public meeting organised by Kaikoura MP Stuart Smith, which took place in Blenheim on Tuesday evening. It was illegal for a company to take advantage of market power under the Commerce Act, but for predatory, or below cost, pricing to be illegal companies had to meet a number of criteria. A Jetstar spokesman said the Commerce Commission had never investigated the company for selling fares below cost. He did not say if the airline engaged in the practice. "Aviation is a very competitive industry with airfares set based on market conditions. Jetstar is able to offer low fares because we keep our costs as low as possible," he said.


  1. Yet no one cries out, not even NZALPA, for companies to be investigated for paying pilots below minimum wage.

  2. Hello Anonymous, can you please explain to readers the relevance of your "below minimum wage"comment to the topic?

  3. I for one am happy to pay for service and consistency. Soundsair consistently have some of the best service in the country and the flexibility customers require

    2 minutes before cutoff time with jetstar results in a sour 'you should have read the terms' response, not even a thanks, we're keeping your money.. 2 minutes after cutoff with Soundsair 'no problems :)!!'

    jetstar do not care at all about the individual, you're just a drop in the big profit bucket for qantas. Soundsair staff seem to genuinely enjoy their job and give the best experience they can

    Sometimes its not just about money

  4. Hi Peter, sure; o woe begot me and my poor company being hard done by with Jetstar offering below cost airfares, please government step in and do something. Meanwhile, Pilots in GA are being paid below minimum wage rates and barely surviving, no one gives a toss about them. Officaldom is always very pro-company and not the worker. How about some balance.

    1. Ha! How about you start your own company and show us all how it's done!

      Perhaps a company like jetstar driving down the cost and making it unsustainable for the smaller guys has something to do with the lower wages pilots are paid?? Or you don't think economics have anything to do with it? All these small charter and flying school owners are just creaming it with the massive profits generated by the low paid pilots!

      You would probably be the first to whine if everyone was paid so well they never moved up and there was no progression

    2. I wouldn't enter into a aviation business where the model was to pay less than the minimum wage to those I would employ, simple.
      Says a lot of the owners with no morals and full of greed.

    3. Agree with the last Anonymous comment. If an aviation business can't afford to pay an employee a wage relative to their qualification, they shouldn't be in business. A Commercial Licence, Instrument/ Multi rating is around the 100k mark. Paying pilots a token wage is not acceptable. Saying Jetstar are driving down wages is rubbish as this has been the way in aviation in NZ before I started and that was 30 years ago. The flying public and owner of the business shouldn't benefit at the expense of the person flying the plane.

    4. Don't know if you have any practical experience of GA in New Zealand, but this has been going on long before the advent of low cost carriers.

      One company used to charge for the privilege of sitting in the right hand seat of a Cessna 406!

      Yes, you read correctly, a Cessna 406.

      Such companies will attempt to explain poor pay and conditions with a false façade of altruism towards low time pilots.

    5. And the ones who took advantage of the excellent experience offered and got on with the job without complaining are where now? Probably well established or well on the way to the career most pilots dream of at the start

      And then there's the guys who moan about pay and conditions on the interweb... :)

  5. As much as I support Sounds Air and I think they can only rise from here, Cessna Caravans have no place on a route that has over 10 Q300's a day. They are far better off attempting Whanganui again, or maybe an afternoon service to Palmerston North. I think they should keep their Nelson to Kapiti service though.

  6. The objective of Jetstar is to undercut the competition and run them off, then raise the prices to maximize profit when they hold the monopoly on the route. Smart thing for Sounds Air would be to step back and put their resources elsewhere to speed up the process, then step back in when prices are high enough to compete with and people are tired of dealing with the Jetstar service.