The New Zealand branch of Singapore Airlines lifted annual profit by 63 per cent as cheap jet fuel helped the airline fatten margins while reaping less passenger revenue.
Net profit rose to $7.9 million in the 12 months ended March 31, from $4.8m a year earlier, Singapore Airlines NZ's financial statements lodged with the Companies Office show. Revenue, which is almost entirely attributable to passengers, dropped 12 per cent to $175.8m, while expenditure fell 14 per cent to $168m.
The NZ company's fuel bill dropped 25 per cent in 2016 to $53.6m as the price of crude oil fell, reaching 12-year lows in February. A global glut of oil, driven by increased supply from the US, Canada, Iraq and the Organisation of Petroleum Exporting Countries and slower demand from China, drove the price of crude 75 per cent down from its levels of mid-2014.
Opec talks at the time failed to come up with a deal to stem the overproduction, though members this week agreed to cut output, with a formal meeting to set production limits to be held in November.
Earlier this year, Singapore Airlines announced the first direct flight from Wellington to Canberra and then on to Singapore with its Capital Express Route, with the first plane landing in New Zealand's capital last week.
Wellington City Council has come under fire for subsidies extended to Singapore Airlines to operate the route.
A document released this week suggests the subsidy could be worth $800,000 per year over 10 years, the Dominion Post has reported. The council's chief executive, Kevin Lavery, has refused to quantify the subsidy, citing commercial sensitivity.
The subsidy comes from the council's tourism fund, "Destination Wellington", which has $1.8m to spend each year.
The accounts show Singapore Airlines cut "other operating expenses" in New Zealand such as depreciation, handling charges, aircraft rentals, parking charges and the cost of in-flight meals to $89.8m from $95m in 2015.
The airline's landing, parking and over-flying charges shrank to $8.8m from $9.5m.
Singapore Airlines doesn't pay income tax in New Zealand under the 2009 double taxation agreement between the New Zealand and Singaporean governments.