N.A.C. Fares Up 5% On July 2

Press, Volume CI, Issue 29856, 23 June 1962, Page 5

N.A.C. Fares Up 5% On July 2

(New Zealand Press Association) WELLINGTON, June 22. National Airways Corporation fares will rise an average of about 5 per cent, from July 2. Increasing operation costs, together with a rise in airport and airways dues, made the decision necessary, Sir Leonard Isitt, chairman of directors of N.A.C., said today.

“The corporation regrets that fares should have to be raised at this time, particularly in view of the fact that traffic growth has been retarded because of present economic conditions,” said Sir Leonard Isitt. “But if costs over which the corporation has no control are to be continually increased, there is no alternative but to raise the fares and trust that this will not result in a falling off of traffic to the detriment of overall revenue.” The corporation had sought to cover rising costs by economising in other directions, but had found that this could be achieved only by a reduction in the standards of service to passengers or by the reduction in frequency or complete elimination of some of the lesser patronised secondary services.

The corporation was obliged under its statute to provide air services to meet the needs of the people of New Zealand as a whole and it was. therefore, under an obligation to continue to provide air services to those areas already served. £lOO.OOO Loss

The last year had resulted in a loss of approximately £lOO,OOO, and while some of the cost factors contributing to this loss were non-recur-rent. others were continuing charges which must be passed on to the travelling public if the corporation were to regain profitability in the future, Sir Leonard Isitt said The non-recurring costs had included approximately £90.000 in standing charges on the fourth Viscount because of the delay in the opening of Momona Airport, together with the losses incurred in the operation of DC3 services to Dimedin during this period. Other non-recurring costs had included £85,000 in aircrew and engineering training programmes associated with the introduction of Friendships. Such training costs would not be entirely eliminated in the present year but would be greatly reduced. Recurring Costs

Recurring costs which would have to be recovered out of revenues included an additional £30.000 because of the mandatory requirement to carry cabin attendants in DC3 aircraft. £84.000 additional depreciation on new flight equipment. £64,000 increase in the corporation’s interest commitment because of increase in capital and increased interest rates. £107.000 increase in salaries and wages because of award

adjustments, and £BO,OOO. of which £42.000 would be incurred this financial year, in meeting increased airport and airways dues. For the year ended March 31, 1961. the corporation had contributed to Government funds £121,685 in interest and £125,342 in taxation.

In addition, for airways and airport dues, it had paid £403,848. The total of these figures. £650,875, represented more than 12J per cent, of the corporation's total revenue.