Airlines are cautioning that proposed cost hikes for landing in New Zealand on top of the reduced demand after the coronavirus outbreak may have a double-whammy effect on traveller numbers.
Justin Tighe-Umbers, executive director of the Board of Airline Representatives (BARNZ), says even before COVID-19 New Zealand was running a risk of airlines relocating to more profitable routes.
“I don’t think passengers realise how much of their air ticket is made up of fees and levies,” Mr Tighe-Umbers says. “In an economy fare from Australia, for example, airport infrastructure charges account for about 23%, government levies and taxes 26% and air traffic control 4%. Airlines make up less than half the ticket price at just 47%.
“In the past decade border agency costs in NZ have gone up around 89% and airports’ up 16%.
In fact, the total cost increase for fees and levies per international passenger (which is a passenger who arrives and then departs NZ) went up $51.7 million in the year to July 1, 2019 and by July this year it will be another $41.1m.
“BARNZ members believe these increasing border costs for airlines and passengers are not sustainable in the long term.”
BARNZ is made up of 28 airlines that fly in New Zealand. At its annual meeting BARNZ welcomed the Government’s announcement of an $11 million stimulus to help the tourism sector but said adding to passenger costs would not stimulate demand in the environment created by COVID-19.
Globally airlines are announcing hits to their profitability and are rapidly consolidating routes as a result. Some countries, like Singapore, have announced packages to help their aviation sectors.
“New Zealand could look at extending its help to aviation too. This country needs to ensure it remains a profitable route for airlines,” Mr Tighe-Umbers says. “The country’s multi-billion-dollar tourism sector depends on airlines to deliver travellers from both short and long-haul destinations.”
Leanne Geraghty, Air New Zealand’s group general manager of airports, was elected President of BARNZ at the annual meeting.
The Board of Airlines Representatives of New Zealand Inc. is the respected and trusted voice of the airline industry in New Zealand. We work closely with the Government, regulators, businesses and local communities to provide cost savings and service improvements for our member airlines; and to create an environment that fosters continued, sustainable growth for them in NZ. For more information, please visit www.barnz.org.nz