23 Feb 2023

Air NZ boss Greg Foran says cheaper airfares at least a year away, despite profit

6:38 pm on 23 February 2023
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Greg Foran says Air New Zealand takes into account suppliers, as well as regions and communities where it operates. Photo: RNZ / Samuel Rillstone

Air New Zealand has emerged from Covid-19 turbulence with a $213 million profit for the first half of the financial year, but do not expect cheaper airfares any time soon.

They're up to 18 months away, according to the airline's CEO Greg Foran, despite some cyclone-ravaged parts of the country having to rely heavily on air travel due to damaged roads.

The national carrier has launched a temporary Gisborne to Napier service after Cyclone Gabrielle took out a significant chunk of State Highway 2, the main route between the cities, which likely will not be fixed for several months.

The $55 route will run for at least four weeks.

"We think that's the right thing to do, to support the regions," Foran told Checkpoint, not long after the airline announced a half-year profit of $213 million.

He said at $55, the Napier-Gisborne route would not pay its way.

"In any business, and ours is no different, you make more money on some routes than what you do on others... It's not all about just doing what's right for shareholders or customers - we also take into account suppliers, regions, communities where we operate."

But despite the profit and widespread damage to roading connections in the eastern North Island, the airline had no plans to set up a Taupō-Napier route, nor cut the costs of others. Foran said the latter was about 12 to 18 months away.

"You know, if you were looking to say, book a seat in April a few years ago, then you would have seen more seats available. Today, fewer planes, less seats and the cheaper fares get snapped up faster."

Flooding seen from the air just outside of Te Karaka, near Gisborne.

Flooding damage in Gisborne. Photo: RNZ / Nate McKinnon

He said the reported profit needed to be seen in context of the business' expenses.

"It's about what you need in order to run this business. To go out and buy a new Dreamliner today, it's pretty comparable to the profit that we've made in the first six months.

"In terms of the pricing on seats, we also want to make sure that there are seats available for people who want to book late. And that's why you tend to end up with a situation where if you book early, you get the cheaper prices. If you book later, you pay more.

"But I would say that you know when I've got on and have a look at some prices domestically this morning, I can fly Auckland to Wellington in the next couple of days from $106. So there are seats out there."

Other future costs the airline had to consider were retrofitting current planes, "buying some new ones" and investing in new facilities, such as hangars.

"These are all important things to ensure, you know, the future success of Air New Zealand."

In the meantime, Foran said the airline would "get in touch with the local mayors" to see what demand and need was out there for certain routes, and whether the cheaper Napier-Gisborne flight deal should be extended.

"We'll play it out and see what sort of demand we get on it. There's a plane that heads up early in the morning and one that comes back later in the day, and we'll just see what sort of demand there is."

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