Air New Zealand hikes domestic fares for second time in two months

2 May, 2008:

Air New Zealand, New Zealand's national carrier, has increased domestic air fares for the second time in two months owing to high prices of fuel.

A statement from Air New Zealand, 76% of which is owned by the government of New Zealand, said the airline would raise the cost of domestic air fares by an average of 3% from May 6, 2008.

The airline is also considering another increase in internationals fares and is reviewing flights to and from Australia.

Norm Thompson, deputy chief executive of Air New Zealand, was quoted by the www.iht.com as saying in a statement: "Air New Zealand regrets lifting fares again so soon after raising prices in March 2008, but could not continue to absorb the significantly higher cost of jet fuel."

A week ago, Air New Zealand, based in Auckland, had lowered its fiscal year profit guidance and said it does not expect to improve upon its 2007 results because of the impact of fuel prices.

The airline has now set its new forecast for normalised earnings before tax and unusual items at between New Zealand $200 million and 220 million (between US $156 million and 171 million; between euro 100 million and 110 million). It had earlier expected to match the profits of New Zealand $268 million earned in 2007.

It was on March 17, 2008, that Air New Zealand raised air fares on its domestic, Pacific Island and New Zealand-Australia services by 3% with a view to recovering partially some of its costs.

Norm Thompson said in the statement: "The airline could not continue to absorb the higher cost of fuel. While Air New Zealand is committed to driving down costs within its control, he said, it is reviewing fares on routes to Australia, which also rose on March 17. Charges on long-haul flights to Asia, Europe and the United States have risen as much as 8% the past two months and look certain to rise further."

Air New Zealand now joins Australia's Qantas Airways Limited, Japan's All Nippon Airways Company and United States' Delta Air Lines Incorporated in hiking fares since late March 2008 in the wake of soaring prices of jet fuel.

Prices of jet fuel in Singapore jumped to a record $145.05 a barrel on April 28, 2008, and have soared 74% in the past one year.