Friday 19th July 2019
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Air New Zealand will make changes after a lawyer complained to the Commerce Commission over scarcity pricing tactics.
Barrister Michael Wigley - whose criticism over opt-out insurance led to a formal warning for the airline in 2015 - has gone to the regulator over the Air New Zealand's use of the phrase 'Flight Selling Out'.
He made the complaint after seeing the phrase when booking flights on his mobile. He said he got to the fine print after scrolling through 13 flights which showed: “Selling out means be quick - there are fewer than 5 seats at these prices.”
The reference is to the seats at a certain price being low, not the flight being close to full.
“Hardly anyone reads the small print on a major booking portal like this. Marketers such as Air New Zealand know it. The airline’s management and board know it,” Wigley said.
After BusinessDesk brought the complaint to Air NZ’s attention the airline responded, “in hindsight we believe ‘fewer than five seats available at these prices’ would better reflect the message we are trying to convey to customers.”
“We are progressively amending both our mobile and desktop booking flows,” a statement from the airline said. The airline didn't address the question of how long it had used the tactic.
Air NZ, which was recently crowned New Zealand’s most trusted brand by research firm Colmar Brunton, said it had not yet received any notification from regulators about the complaint that was made earlier this month.
The Commerce Commission said it was still reviewing the most recent complaint. It received two others about scarcity tactics in the past 12 months, but has taken no action.
The practice of generating ticket sales by giving consumers the impression there aren’t many left is among complaints the Commerce Commission has against online ticket marketplace Viagogo. That case is due to be heard in the Court of Appeal in August.
Wigley has also made a formal complaint to the commission about the airline and its sustainability claims relating to the removal of newspapers from Koru lounges.
The airline said there are two reasons for removing newspapers from lounges. First a decline in customers reading paper materials because news can be accessed online, and second its efforts to minimise environmental impact.
In May the airline updated its guidance for 2019 to profit before tax exceeding $340 million, from previous guidance of between $340-400 million. The guidance had already been cut in January from $385-495 million.
At the time Jarden (then FNZC) analyst Andrew Steele said he was watchful of the domestic consumer environment as revenue was disappointing due to slow domestic travel.
An analyst who asked not to be named said that Air NZ will use scarcity tactics to drive better revenue outcomes because it motivates people to make decisions.
“It is a business very driven to drive revenue outcomes and it would be looking for that outcome whether it was six months or 12 months ago.”
Competition lawyer Wigley has been outspoken about the airline’s practices in the past, four years ago he complained about how the airline would automatically insurance to a fare, resulting in a formal warning.
The shares rose 0.2 percent to $2.78 at noon today, having fallen 14 percent in the past year.
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