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Air New Zealand increases fuel surcharge for tickets sold in Australia
Due to escalating fuel prices, Air New Zealand has advised today it will increase the YQ surcharge (incorporating both the airline’s current fuel surcharge and insurance levy) on all tickets issued within Australia on or after 06 May 2006.
The increase includes:
Australia to New Zealand/Pacific Islands (excluding Perth) will increase $7 to $62 per sector
Perth to New Zealand/Pacific Islands will increase $14 to $96 per sector
Australia to USA (excluding Perth) will increase $11 to $104 per sector
Perth to USA will increase $16 to $138 per sector
Australia to London (excluding Perth) will increase $17 to $166 per sector
Perth to London will increase $22 to $200 per sector
Last week Air New Zealand Chief Financial Officer Rob McDonald said Air New Zealand regretted having to increase fares but the numbers were stark.
“Fuel is now our number one cost. The price of benchmark Singapore Jet Fuel has more than doubled from around US$40 in April 2004 to US$89 a barrel today.”
Mr McDonald said this meant Air New Zealand’s fuel bill had risen from NZ$480 million in FY04 to nearly NZ$1 billion in FY06.
“Until now customers have been shielded from much of the effect of these price rises by the Airline’s fuel hedging programme. The Airline has also borne additional fuel costs over and above its hedging, avoiding passing those costs on to customers,” he said.
But recent falls in the value of the New Zealand dollar against the US dollar and the fact that Air New Zealand’s more favourable fuel hedges have rolled off compound the situation and mean this shortfall must now be addressed.
“This is a business that is very sensitive to fuel price rises. Every US$1 increase in the price of jet fuel forces down our EBIT by US$8 million per annum before hedging. In the last month alone, fuel prices have increased by nearly US$10 per barrel,” Mr McDonald said.
Graham Muldoon
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