'No Profiteering By Air New Zealand’

Press, Volume CVII, Issue 31539, 29 November 1967, Page 16

'No Profiteering By Air New Zealand’

There was no question of Air New Zealand profiteering from devaluation, said the airline’s Christchurch district manager (Mr H. K. Ford) yesterday.

He was commenting on a letter to the editor of “The Press” which asked how Air New Zealand justified raising its fares to the full extent of the country’s devaluation when the bulk of its costs were met with the same devalued currency. The letter was signed “Taken For A Ride.” The changes in international air fares paid in New Zealand currency were a direct and inescapable consequence of devaluation, said Mr Ford. Fares paid in any devalued currency for travel by any airline anywhere in the world had had to be adjusted to new exchange rates. It was purely an arithmetical calculation and would in no way represent an increase in airline profitability. The changes were necessary because aviation was a fully international industry

and all fares were payable in any currency. Convertibility at rates allied to international exchange rates was, therefore, essential, said Mr Ford. As for the effect on Air New Zealand, more than half of Air New Zealand’s costs were incurred overseas, including repayments on aircraft and these expenses had risen as a consequence of devaluation. Much of the airline’s revenue was earned In Australia and the United States. Those countries had not devalued and, therefore, Air New Zealand revenue from those countries would remain unchanged. Because of devaluation, however, Air New Zealand’s costs in Australia and America had risen by 25 per cent.

These figures indicated a situation very different from that outlined by “Taken For A Ride,” said Mr Ford.