Air New Zealand has increased fares by as much as 25% on the same time last year as a result of war in the Middle East, analysts at Forsyth Barr say.
Prices on long-haul bookings made over the past four weeks were up a quarter, the Tasman and Pacific Islands are up around 20% and domestic around 10%.
“Domestic fares were already experiencing robust inflation ahead of the fuel price spike,’’ the analysts say.
The long-haul spike comes as capacity restrictions on Middle East transits are impacting other airlines.
The analysts say NZ’s response to soaring fuel prices has been to moderately reduce capacity (predominantly on domestic and short haul international routes) and lift prices.
“Its options are limited. Our data shows that quoted prices have increased materially in recent weeks, which will help soften the bottom-line impact from higher fuel costs, though will also dampen demand.’’
The net impact will be deeper losses than those incurred in the first half of the financial year, adding pressure to the airline’s balance sheet.
“We retain an Underperform rating,’’ Forsyth Barr says.
