Air New Zealand’s boss is confident it has enough jet fuel to operate its current network schedule, despite facing expected losses and fallout from two rounds of cuts.
Chief executive Nikhil Ravishankar also reiterated the importance of the airline’s flagship Auckland-New York service amid increased competition from Qantas, with two new purpose-built, long‑range Boeing 787-9s intended to take to the skies later this year.
Speaking to Newstalk ZB this morning, Ravishankar said New Zealand currently had 24 days of jet fuel stored – the minimum stockholding level allowed – with another “30-odd days” en route.
Confirming Forsyth Barr’s estimated $229 million financial year loss as “there or thereabouts”, Ravishankar declined to give further specifics, instead telling host Mike Hosking that Air New Zealand was “controlling the controllable” amid a “commercial crisis”.
According to Forsyth Barr analysts, prices for Air New Zealand’s long-haul flights were up about 25% on a year ago, while transtasman and Pacific flights were up about 20% and domestic about 10%.
“The way that the supply constraint’s being handled is through price,” Ravishankar said.
“Price will then naturally lead to demand impacts, but we’re not seeing necessarily [fuel] supply lines fraying.”
With jet fuel prices effectively doubling since end of February, Ravishankar said the airline faced a “complicated” return to normal but assured there was minimal risk to supply for the foreseeable future.
However, the crisis should prompt the Government, fuel suppliers and users to consider what New Zealand needed to mitigate similar price shocks, he said.
“I remind a lot of our stakeholders that air travel demand is elastic, and there’s only so much our customers can absorb as far as these price increases are concerned.”
Ravishankar said the airline had started experiencing pushback from domestic customers on its pricing, but demand for transtasman and long-haul services remained strong.
Operating the new 787s between Auckland and New York would help lower costs and boost fuel efficiency on the ultra long-haul route, which has lagged in recent years amid aircraft shortages, maintenance delays and Qantas’ successful bid to run competing services.
Originally due in May, the new 787s were on Boeing’s assembly line but faced delays of two to three months, Ravishankar said.
“Those are mission-fit. They’re being built for New York. And so we just need to get our hands on those aircraft.”
Having promoted Air NZ’s new Skynest product in New York last week, Ravishankar lauded the campaign’s success, receiving about seven billion impressions in two days.
“That’s the equivalent of a whole year’s worth of marketing that we would do to promote not only Air New Zealand services, but New Zealand to the world.”
Global fuel prices have surged amid a protracted conflict in the Middle East, with Iran’s effective closure of the Strait of Hormuz – through which 20% of global fuel passes during peacetime – significantly disrupting global energy markets.
Less than two weeks into the war, Air NZ cancelled approximately 1100 flights between March 16 and May 3 in response to the increased prices, impacting 44,000 customers and reflecting a 5% drop in services.
It was followed by a second round of cuts in early April, affecting a further 4% of flights and impacting services to regional hubs such as Nelson and Tauranga between May and June.
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