New Stats NZ figures show international air fares dropped sharply in the month before war broke out in the Middle East.
The select price index shows international air transport prices fell 16.4% in Feb compared to the month before, and were up just 1.8% for the year.
But travellers now face sharp increases in fares.
The attack on Iran by Israel and the US on 28 Feb has sent oil prices soaring and the margin for jet fuel (the crack spread) up by as much as 130% as the main supply route from the region has been choked off. This has led many airlines to quickly add fuel surcharges or raise base fares.
A Deutsche Bank analyst found that in the first week after the war began, advance purchase fares more than doubled for long haul flights out of the US. And a sustained rise in jet fuel prices poses ‘an existential threat to the industry’s financially weakest carriers’, the banks say.
Here, Air New Zealand has pushed up long haul fares by $90 per sector.
. . . Minister On Prices
Aviation Minister James Meager says he understands why NZ increased prices so quickly and that ‘it would be nice’ for them to come down again at equal speed when oil prices drop.
“I think the reality is across every industry; prices always take longer to come down than to go up.” There was hedging against possible fuel shortages, he says.
Innovation and Employment figures on 08 Mar show there were jet fuel supplies in the country or on the water for 47 days—just before Anzac weekend.
Meager says he had assurances from NZ that its decision to consolidate regional routes (among 1100 flight cancellations over six weeks) was a temporary response to the crisis.
Stats NZ says domestic fares rose 12.8% in Feb compared to the previous month and were up 10.6% for the year.
