Sharechat Logo

Air NZ looks to jump-start domestic passenger growth by cutting fares

Tuesday 26th February 2019

Text too small?

Air New Zealand said it is cutting its lowest domestic fares by up to 50 percent from today as it looks to jump-start its domestic passenger growth.

Chief executive Christopher Luxon said the move is the "biggest overhaul" of the airline's domestic pricing structure in more than a decade and will see more than 750,000 seats a year available for less than $50. It doesn't anticipate a material impact on earnings

The airline said it is shrinking its lowest fares on 41 domestic routes meaning Kiwis will be able to fly within New Zealand for as low as $39. Its longest domestic service – the two-hour 1,174 kilometre direct flight between Auckland and Invercargill launching in August will have seats available from $79. 

Fares on the airline’s main trunk routes are also shrinking – Auckland-Christchurch and Auckland-Wellington now start at $49 one-way and Christchurch-Wellington from $39, it said. 

Air New Zealand said the change is "not material" for its earnings. In late January it warned annual earnings may fall by as much as 37 percent as it deals with disruptions caused by global issues with Rolls Royce engines and slowing travel growth. 

It is due to report its first-half result tomorrow and didn't alter annual guidance for pre-tax earnings of $340-400 million in the year ending June 30. That includes the impact of the airline's engine problems. It previously said the engine problems were expected to improve through the year and that a slower pace of growth in domestic travel and inbound tourism had weighed on revenue. 

While Air New Zealand has benefited from a strong tourism sector, that expansion may be slowing. Growth in tourist accommodation slowed in December as international guests spent fewer nights in the North Island, according to the latest data from Stats NZ.

Total guest nights rose to almost 4.2 million that month, 1.4 percent more than a year earlier. But that was less than half the increase posted in October and November and about a third of the increase seen in the final quarter of 2017.

The airline's latest operating statistics showed a 4.1 percent increase in passengers carried across the group to 1.31 million in January. That took the financial year-to-date tally to 10.2 million, a gain of 4.3 percent.

Its domestic routes reported a 1.5 percent increase in passengers carried to 775,000 in January. Year to date it has carried 6.5 million, up 3.2 percent on the year.  

“We have shrunk our lowest fares by up to $45 in a move we believe will further supercharge domestic tourism," Luxon said today. 

The shares fell 0.6 percent to $2.63, and have sunk 15 percent so far this year. 


NOTE: please be advised to read full articles from Business Desk Website, you will have to pay a subscription fee on their website.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Finzsoft blocked from quitting credit unions contract over Christmas
China Unveils Plan to Reduce Single-Use Plastic by 2025
20th January 2020 Morning Report
Rio Tinto reiterates Tiwai position as aluminium prices stay weak
TIL downgrades earnings by up to 40%, suspends first-half dividend
Govt accounts unexpectedly in the black as lumpiness continues
17th January 2020 Morning Report
Gentrack loses investor support with vague downgrade
Margin pressure continues at Michael Hill although sales rise
House prices hit fresh records as sales stepped up in December

IRG See IRG research reports