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NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

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Thursday, May 12, 2011

Competition alive and well down under

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According to the senior executives of Jetstar and Air NZ, the recent and 'short lived' offer of $1 and $5 flights to Auckland is a sign of real and effective competition in the aviation industry. That's right, the airlines were offering 600 tickets for just 1 hour the other day, and on just one of their hundred-odd routes, and that constitutes competition.
In fairness, there is going to be some competition in this area, and the reasons are:
1. Displacement of services from Christchurch - The new terminal is complete at Christchurch airport, and I am guessing that the airport authority will be looking to raise airport fees paid by the airlines. This I believe is why Jetstar is trying to lure people to Dunedin airport. This is particularly appealing for all those travellers coming from the South. That's right, you might have to travel as far as 8 hours from the far south because of the limited connections offered from Queenstown and the premium prices you pay for them.
2. New market entrant - Air Asia is a new discount entrant into the market. It will lure passengers, but it is only going to take market share from those flying to Asia; so Jetstar after Pacific Blue's exit is going to retain the lion's share of the Australian market.

Dunedin is a big of a hole. Its a very ugly city, and its layout is messy. But it seems, if you can both chancing 1-hour discounts, and you are lucky enough to hear about one, they are not really competition. Really they are token gestures offered by airlines, and duly reported by the media. Sounds like cheap advertising to me. Yep, there are plenty of airlines offering 'discounted tickets'; the problem however is that there are:
1. So many conditions attached to them they are not worth having, i.e. No meals, no flexibility to change the flight, substantive luggage restrictions, highly pernicious penalties complying with their restrictions.
2. The need to carry the risk of buying a ticket you cannot cancel. I suspect they have made as much on unused tickets as those used.
3. The burden of having to read their 9-page list of conditions; or carrying the risk of not reading them.

Yes, competition in the modern era is an illusion. Its all about perceptions, or 'smoke and mirrors', or 'bait and switch'. There is a law against bait advertising in Australia....this seems to breach it. But of course there are those wonderful inventions - the 'asterisk' (i.e. *). They are magic to the business community. They only need to ensure that they have one on the advertisement, and all conditions are in play....and that makes it not 'bait advertising'.
For sane people like myself, the letter of 'statutory law' denies too much, and that the spirit of the law is in breach. Statutory law offers no prospect of justice so long as:
1. It remains arbitrary - no rational, principled basis, no spirit, just 'letter of the law' loopholing. i.e. The law has no context.
2. Justice is expensive - high legal fees, and the prospect of court appeals

I recall a case of a car rental company being challenged in the court by a customer who was charged enormous legal fees for the privilege of saving $50. Seems like a false economy to me. No one it took 10 fees for the practice to be challenged. In the 'common law' case of bank fees, the banks are being sued in a class action in Australia after 20 years of duping customers.


'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


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