Call to cut airfares as fuel price plunges

A major travel agency is frustrated airlines aren't yet slashing average fares.

Airlines say issue complex but MP says public missing out on savings.

Airfares should fall to reflect plummeting oil and jet fuel prices but airlines are stalling when it comes to delivering cheaper fares, consumer advocates say.

The price of crude oil has plunged to near a six-year low, with impacts on the costs of fuel and other petrochemical derivatives. Airlines say the issue is complex, but a major travel agency is frustrated airlines aren't yet slashing average fares.

Flight Centre general manager Simon McKearney said he expected domestic and international fares to fall - but airlines were delaying savings for consumers.

"It's wait-and-see at the moment," Mr McKearney said.

He said savings of 5 to 10 per cent on airfares were very likely in the short term. The issue would be a talking point at the major travel expos in late January, where agents had a chance to promote their business.

"We'll be putting up our hand saying: 'Right, we want to see some of these decreases flowing through to the consumer."'

Taxi trips to the airport should also be cheaper than they are now, said Sue Chetwin, Consumer NZ chief executive. "You could probably say that about any public transport actually," she added.

Ms Chetwin was sceptical airlines would drop prices soon.

Labour MP Stuart Nash said airline passengers, like motorists, were missing out on savings comparable to the fall in crude and fuel prices.

He said airlines and petrol companies must realise they "cannot have it both ways".

"Kiwis are always fed this, it's almost bulls***, by the airlines and by the petrol companies: 'Well, the price of crude's gone up, therefore we're going to have to increase the price of airfares and the price of petrol at the pump'. And we buy that, and say: 'Okay, that's fair enough'. When the price drops like it is now, [the companies] are really quiet on his sort of stuff."

Air New Zealand said it "manages its exposure to fuel price fluctuations" by locking in prices for future jet fuel purchases ahead of time. "As a result we are largely unaffected by recent changes in fuel prices," a spokeswoman said.

Jetstar said fares fluctuated frequently anyway. "Any change in the macroeconomic sphere would impact the way we do business," said Jetstar spokeswoman Zoe Knobel.

"While the recent reduction in oil prices is welcomed, fuel is just one component of the overall price of an airfare."

Fares likely to be held

Public transport fares in Auckland are unlikely to drop any time soon, even though fuel prices have tumbled to their lowest in more than four years.

Auckland Transport says an annual fare review is still several months away. There can be no guarantee of price cuts then, or even that fares will not rise, as fuel is "only a part" of fleet running costs. But a spokesman said: "We will continue to strive to keep fares competitive."

The Auckland Public Transport Users' Association wants the council body to consider reducing fares for users of its electronic Hop cards