26 Sep 2018

'Headwinds' of rising fuel costs put pressure on Air NZ's ticket prices

8:05 pm on 26 September 2018

Ticket prices on some Air New Zealand routes will increase from later this week due to rising fuel prices.

Air New Zealand flight.

Photo: RNZ / Alexander Robertson

Corporate travel agent FCM announced the airline is pushing up prices on flexi fares and last minute bookings by 4-8 percent on some routes from Friday.

In an update to customers it said the increases would kick in on "higher booking classes".

Examples included:

  • Increases of 5 percent on Auckland to Wellington and Christchurch to Wellington routes
  • An 8 percent increase on Auckand to Palmerston North bookings
  • Four percent increases on routes like Christchurch to Invercargill and Blenheim to Wellington.

It also said that there would be a $10 one-way increase across all trans-Tasman fares.

The price rises came the day Air New Zealand fronted shareholders at its annual meeting in Christchurch.

The company said it was facing what it called "headwinds" of rising fuel prices.

Air New Zealand chief executive Chris Luxon told RNZ that it does not take price rises lightly, but New Zealanders were aware of steadily rising fuel prices.

Oil prices globally have trended higher amid concerns about supply. Brent crude oil is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007.

US President Donald Trump in a speech before the United Nations this week called on OPEC again to boost crude output.

Air NZ chairman Tony Carter said the company was optimistic about market dynamics and demand trends, "but note that the current levels of jet fuel price will be a headwind on profitability compared to the prior year".

Mr Luxon told the annual meeting that the company was very proud of its financial achievements. "We achieved the second highest financial result in Air New Zealand's history while dealing some extraordinary operational challenges.

"If we put 2018 into context, we dealt with the rupture of the the fuel pipeline into Auckland last September, challenges with airport infrastructure, the unscheduled maintenance issues on the Rolls-Royce Trent 1000 engines, a number of extreme weather events and last but certainly not least, rising fuel prices."

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