Air New Zealand eyes fare hikes as costs surge

The airline is currently reviewing fares and capacity to better reflect ongoing cost pressure. — Bloomberg

WELLINGTON: Air New Zealand says it may raise ticket prices to cover rising costs after reporting a 38% slump in interim earnings and forecasting an even worse second half.

Inflationary pressures have driven up non-fuel operating costs over the last four years, which is “having a significant impact on the cost of providing air services, including on the domestic network,” the Auckland-based carrier said.

“The airline is currently reviewing fares and capacity to better reflect ongoing cost pressure,” it said.

Air New Zealand is facing intense competition on its international routes, particularly from North America where US airlines have not yet returned to China at scale and have directed some of that additional capacity to the New Zealand market.

It is also grappling with Pratt & Whitney engine maintenance issues on its Airbus A321neo fleet, which will see as many as five of its newest and most efficient aircraft out of service at any one time across the next 18 months at least.

“On top of these operational challenges, we are now leaning into the reality of a worsening revenue and cost environment, which is expected to have a significant adverse impact on performance in the second half,” chair Therese Walsh said. — Bloomberg

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