The surprise is that anyone would be surprised. After three years since entering the NZ domestic air travel market with the primary strategy of cheap fares, Pacific Blue calls it quits because they cannot make enough money to remain in that business.
And so all those bargain-motivated people, and principally the popular media who ran breathless headlines about how air fares were now wonderfully cheap and good for consumers, now bemoan that competition will diminish and low fares will be harder to come by. It’s not fair!
Well, what did we expect? That private businesses will be happy to run at a loss just so we can grab the cheapest possible deals forever? While grabbing cheap seats is a rational behaviour in the short term, it’s irrational in the long term because in the end it makes businesses less viable and more prone to cut back on the parts of their business that cannot help recoup their losses.
Over time, we bargain-hungry consumers get what we pay for – cheap deals in the short term but insecurity about the long-term survival of the services and products we value so little that we won’t pay a reasonable price for.
I’m happy to pay a fair and respectful price for all the services I regularly use, from electricity and phone to the local petrol station and favourite cafe, because I’m then confident that they’re making enough profit to remain in business and give me ongoing service. Try screwing them down too hard and next month they may not be there.
So with air fares, I’d rather pay a fair price than grab a cheapie if it means that the airline will still be around when it comes to actually flying me.
Trouble is – defining just what fair and respectful is! Here in the states, the airlines are adding on more and more surcharges for luggage, leg room etc and they’re all tax free so it pays for them to reduce base price and then add it all back on through surcharges. All we ever do is develop a cynical and almost hateful view of all airlines! I just ignore specials now as by the time I’ve tried to find the real low price I’ve gone gray!. I’m still fairly happy with Air NZ to bring me home and want to support them rather than as you say someone who may not be there next time.