Air fares from N.Z. to rise

Press, 17 December 1976, Page 1

Air fares from N.Z. to rise

From

LES BLOXHAM,

travel editor

International air fares from New Zealand will be increased early next year. The general manager and chief executive of Air New Zealand (Mr M. R. Davis) confirmed yesterday that the devaluation of the New Zealand dollar and the imminent increase in oil prices would mean that flying will soon cost more. But Mr Davis was not prepared to say at this stage how much the increase would be. Other airline representatives in Auckland however, predicted that the fares will increase by 5 or 6 per cent, the final figure depending on the outcome of the O.P.E.C. conference, which is expected to announce this week an increase in the price of oil. Mr Davis did say that a 10 per cent rise in O.P.E.C.’s charges (which is widely expected) would be met by a 2 or 3 per cent increase in fares. The balance of the increase would be tailored to offset the effects of devaluation. The devaluation of the

New Zealand dollar last month would mean additional realised exchange losses bordering on $750,000, he said. Mr Davis emphasised that the whole question of fare structures was being closely examined “both here and in Australia,” and that although an announcement was unlikely until later this month, it had to be assumed that there would be an increase. Mr Davis said that airlines did not want to increase fares to the detriment of loadings. “There is already evidence of a downturn in the number of passengers on some routes, and although long-haul loadings are now holding up, there has been a negative growth on the transTasman services,” he said. “We will absorb as much as possible ourselves and endeavour to keep the increases in air charges to a figure which we believe the market will accept,” Mr Davis said. Asked whether Air New Zealand had considered

any austerity measures, such as withdrawing its meal services on short flights or reducing frequency, Mr Davis said that the meals amounted to only $2.50 a passenger, and that there would be no need to reduce capacity unless the downturn continued. He felt there would be an improvement later next year.

Mr Davis said Air New Zealand could save $lOO,OOO a year by stopping the publication of its in-flight magazine, “Jetaway,” and although he had considered doing that, he had been “prevailed upon” to think otherwise. Mr Davis ended on an optimistic note: “We are still making money and I anticipate there will be a profit for the year.” Last year, the airline achieved a net profit of $5.56M, compared with $4.36M in 1975. The present year had been more stable than last.

Will the profit be greater than last year’s record one? “I have an idea what it will be, but I’m not going to say,” Mr Davis said.