Air NZ, Barrier Air have increased their fares – here’s by how much

Air New Zealand's fare increases are in response to “unprecedented volatility” in global jet fuel markets.

New Zealand travellers are being hit with airfare increases as airlines grapple with rising jet fuel prices, which threaten the industry.

Air New Zealand revealed to the Herald that for someone flying one-way in economy, its domestic flights have increased by $10, short-haul flights by $20 and long-haul flights by $90.

It comes after the airline announced it implemented fare adjustments in response to “unprecedented volatility” in global jet fuel markets this morning.

“If the conflict leads to continued elevated jet fuel costs, we may need to take further pricing action and adjust our network and schedule as required,” the airline said.

Grant Bacon, chief executive of Barrier Air, a regional airline that flies primarily between Auckland and Great Barrier Island, said the carrier has also increased its fares. However, he warned it’s not enough to cover costs.

“We received a notification from our fuel supplier advising that, effective immediately, jet fuel is increasing by 95 cents per litre,” Bacon told the Herald.

“This one price rise adds over $1.1 million of cost to our operation. One issue is that the fares we have sold do not come close to covering this sort of price rise. In response to this issue, we have had to increase our fares by $10-$15 to try to start to cover this huge cost, but right now it isn’t enough.”

Bacon said that the company is reviewing prices daily and hopes to see relief on fuel costs soon, but he is “not confident”.

He is calling for Government action to “maintain full operations to our remote regional communities”.

“What we need is immediate relief from some Government costs, such as Airways [NZ] charges and also CAA [Civil Aviation Authority] levies,” he said.

According to Bacon, it’s “seldom the case” that airlines earn a significant profit as a result of high airfare prices.

“Perhaps long-haul foreign legacy carriers are doing well, which is mainly due to a very high passenger volume, but aviation is a notoriously difficult and expensive industry,” he said.

“What makes it worse is when you are having to pay for everything, which is priced in USD, [you pay] in New Zealand dollars.”

Simon Wallace, chief executive of Aviation Industry Association NZ, told the Herald fuel costs are affecting more than just commercial flights.

“Everyone in the industry is affected by the fuel increases,” he said.

Wallace cited fuel as one of the biggest cost bases for an airline.

Jet fuel prices were about US$85 ($144) to US$90 per barrel before the conflict but have surged to US$150-US$200 in recent days.

“And a lot of these airlines are under a lot of pressure already,” Wallace said, noting that when fuel prices eventually come down, there would be a lag before airfares do too.

For travellers wary of rising costs, Wallace’s advice was this: “Book as soon as you can, during off-peak times.”

Jen Staples, air and product manager for the Flight Centre Travel Group, also recommended travellers act fast.

“For those travelling over Easter, many of those trips will already have been booked and paid for well in advance. However, pricing on unsold seats can move more quickly, as airlines respond to fuel costs as well as supply and demand,” Staples explained.

“There will likely be very strong demand for any available seats in the near term, which could put further upward pressure on pricing.

“If you’re planning travel in the coming months, particularly over busy periods, it’s worth booking sooner rather than later to secure current fares while seats are still available.”

Varsha Anjali is a journalist in the lifestyle team at the Herald. She is based in Auckland.