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Sunday, January 20, 2013

Discounted NZ flights to attract tourists

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NZ is fighting a losing battle on most fronts for the simple reason that - its isolated. It is a difficult place to fly to. I dare say a lot of people wanting to come here get on various websites for the airlines and simply give up after realising how difficult it is to fly there, and the cost of direct flights. Invariably people will end up simply going to a closer location, or Australia, since they invariably have to transfer in Australia for NZ anyway. This is a shame because NZ has a lot to offer tourists. In fact, its capacity to offer a greater cultural experience is being undermined by the lack of economic activity that tourism could surely improve. Which makes one ponder the question - is there more the government and industry could be doing?

I ask whether NZ should be aiding travel to the country. Why can't it be as easy as flying to Australia? What does this require? Surely it requires:
1. More flights - more destinations, more timetable flexibility, so that people can actually get here at reasonable times.
2. Cheaper flights - using some type of coupon scheme. The tourist organisations need to find a way to make it targeted.
3. More airlines - the reverse seems to be the case. The cheapest flights to NZ were with Air Brunei (to Auckland) and Air Asia (to Christchurch). Both companies were forced to abandon these routes.

If we recognise the economic boon that tourists are for NZ; might it actually make sense for the NZ government to actually 'subsidise' tourists to stay in NZ, recognising that they are going to be contributing far more. What type of scheme is the question? There are several impediments:
1. Lack of jobs for tourists to stay longer - Clearly cheaper tickets would allow more tourists to come, allow more student tourists to work in the country, and contribute in a way the old retiree immigrant is not doing, i.e. by spending money. Already I see NZ is the first nation to allow Filipinos to work in the country...if they have $6000 to get here. Fair hurdle. But they are not going to get jobs as easily as Chinese, Japanese or Korean speakers since Filipinos English-speaking skills are not useful.
2. Lower cost education - The existing model is to ask foreigners to pay more to study in NZ (or Australia) than the local population. This can only curtail the spending that these students do when they get here. Why you might ask, in an age of discrimination-free politics, are foreign students paying more. I fully expect more Asians to go to the Philippines to learn English in future to avoid this rip-off.
3. High cost flights - It is a hard sell to offer discounted flights. It might particularly make sense for packaged tours where the value of 'domestic spending' per travel is 3x more than the nominal flight cost to offer a significant concession to these people. Old people travelling abroad are accustomed to spending large amounts for their unique experiences.

The challenge of course for the tourist industry is how to share any such burden. Perhaps the incentive might be for travellers to Australia to be offered a $300 hotel coupon to come to NZ. Perhaps not. But this is the type of scheme that might deliver greater economic spending at a time when NZ is educating kids, only to see them leave the country. Admittedly Asian kids are replacing them; but I forecast that in coming years, the flow will go the other way, as people realise that Asia is the place to be. For instance, consider the statistics:
1. Philippines - Population growth of 2% per annum; rise in incomes 8-12% per annum, rate of urbanisation 8% per annum.
2. New Zealand - Population growth - zero, rise in incomes - only among skilled workers, who invariably take more overseas holidays rather than spend it in NZ. Rate of urbanisation is also relatively high because of the lack of opportunity in rural communities...which largely reflects the fact that land is tied up in the hands of 'old money' who live on speculative gains rather than creating value. i.e. They sell their land to retired foreigners and city executives as 'premium lifestyle blocks' to finance their overseas jaunts. A false economy because they never really 'earned' the money.

Of course no one really cares about this if your economy is growing strongly. Which brings us back to the issue of why the Philippines and other emerging markets are increasingly 'relevant' and NZ strategically set adrift, as elites in power fail to see the forest through the trees.

Asian property markets outperforming Japan Foreclosed Guide Philippines Property Guide
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'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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