Changes on short-haul Air NZ flights, fares up

RNZ

Air New Zealand is doing away with the option for passengers to buy food on its short-haul flights, instead offering everyone on board a snack or meal.

The airline has announced changes to its short-haul flights from June.

But from today, the airline will be increasing long-term domestic fares across all routes.

In a statement, Air NZ acting general manager for domestic Jeremy O’Brien said it had faced increasing costs over the past couple of years like many Kiwi businesses.

“As we’ve previously signalled, our cost base has risen more than 30%. To date, we’ve absorbed as much of this as we can. To reflect higher costs of providing air services, we need to continue to review our pricing.”

House of Travel chief operating officer Brent Thomas said Air NZ had indicated prices were going to change and inflation had been “running hot”. Domestically, there was not a lot of competition, so travellers would have to take what was available.

People who were able to book well in advance would still be able to get good fares, but those booking last minute “are paying the price”.

Thomas said air fares were “significantly cheap” before Covid-19, but costs had gone up. “I think we all know that when we go fill up our car, the price of petrol’s gone up. Facing the same thing, a significant part of running an airline of course is the jet fuel and that has gone up.”

Thomas said it was fair that the airline passed that cost on to consumers.

As part of changes to simplify the airline’s different fares, everyone will have access to Air NZ’s full entertainment suite, and be served a snack or a meal, as well as tea, coffee, water and juice. The airline is also discontinuing its seat+bag fares, though will allow seat-only customers to add a checked bag for a $30 fee.

Seat-only customers travelling to Australia and the Pacific previously received no food with their airfare, and had the option to buy a snacks on board. That option will be discontinued under the change, but passengers will still be able to buy drinks.

The fare types available from June 11 will be theworks, worksflexi, premiumeconomy, premiumflexi, businesspremier and businessflexi. Works customers will still receive the same inclusions of a checked bag, a full meal and drinks, entertainment and free standard seat selection.

The updates were based on customer feedback and changes passengers were looking for, the airline’s statement said.

Meanwhile, Stuff reports Air NZ is to resume flying its aircraft to Perth early next month, ending its lease agreement with Wamos Air. The Spanish charter airline has been flying from Auckland to Western Australia while the national carrier grapples with engine-supply issues.

Air New Zealand has reduced its annual earnings forecast as a result of a further softening in demand for its domestic flights and flights to and from North America.

The company had forecast when it released its interim profit result in February that its pre-tax earnings for the year to June 30 would land somewhere between $200 million and $250m, but has now reduced that range to between $190m and $240m.

Air New Zealand blamed “cost of living pressures” and reduced demand from government and corporate customers for the weaker demand for domestic flights.

The performance of its services to North America continued to be “impacted by very competitive pricing pressures as the market adjusts to the significant capacity added into the New Zealand market by US carriers”, the airline said in a statement to investors.

Delta Airlines resumed flights to and from New Zealand and North America in October.

Passengers reported being able to buy return flights to Europe via the US for just under $2000 for travel in early November, with flights on Delta’s US to New Zealand segment relatively empty. Air NZ said it expected the weaker demand would result in a $40m to $50m hit to its underlying profit.

But, partly offsetting that, the national carrier is now forecasting a larger financial gain as a result of customers failing to redeem credits from the company.

The airline issued a huge volume of credits to travellers as a result of having to cancel flights during the Covid-related travel restrictions.