Air NZ boss - Here's why airfares will stay down

Air NZ is facing increased competition - so expects airfares to stay low. Photo / Mark Mitchell

Air New Zealand says increasing competition will continue to push down air fares and the airline will sell around 800,000 fares for under $100 this year.

The company announced a record pre-tax profit of $663 million today. Its chief executive Christopher Luxon said it had never been a better time to travel.

More international and domestic competition would mean fares would be kept down. Air New Zealand was also expanding its route network.

"The reality for us that as we go forward there will be more competition in the market place. It will mean there will be pressure on our yields as we go into the coming year."

Luxon said in 1983 a one-way flight from to Auckland to Los Angeles cost around $1000, today it's less.

"In a 30 year period there wouldn't be many other products and services that have done that."

Consumer Price Index data showed that between December last year and June domestic air fares fell 14 per cent as a result of increased competition.

Qantas subsidiary Jetstar started flying regional routes in that period.

Air New Zealand was also facing increased competition across the Pacific from American Airlines in particular, more transtasman competition and a growing number of carriers from China which have or are about to increase flights.

The airline is also looking to introduce wifi on some of its planes by the end of the year.

The reality for us that as we go forward there will be more competition in the market place. It will mean there will be pressure on our yields as we go into the coming year.

Luxon said the company's board had discussed progress this week.

"It's something we're passionate about, it's something we want to bring to the market. We've got to work out how to do it."