23 August 2005

The cost of flying may never coming down

Air New Zealand's decision to further hike the fuel surcharge on its fares is a clear, unimpeded signal that the price of oil has taken off and is unlikely to come down, Green Co-Leader Jeanette Fitzsimons says.

The national carrier will next week increase its domestic surcharge by an average 4.5 percent and its international add-on by between 15 and 28 percent. Jet fuel, which is around 30 percent of Air NZ's operating cost, have risen 42 percent in price in the last year and about a quarter in the last three months.

"The constant rise in airlines' fuel surcharges is a much more direct signal to the public of the inexorable rise in the cost of oil than the price of petrol for motorists at the pump," Ms Fitzsimons says.

"While the fuel surcharge's masking of the real price of buying a ticket is misleading, it is raising the public's awareness of what's happening in the oil market.

"By adding a surcharge, the implication is that the price of fuel will come down at some stage. This is simply not going to happen for any sustained period of time, so I believe it is inevitable that the surcharge will eventually be folded into the shop window price of airfares.

"The constant increase in the cost of air travel also has serious implications for tourism.

"New Zealand's tourism industry needs to actively work to reverse the current trend towards more people on shorter visits, otherwise it will suffer a crash in business when that style of travel becomes untenable. We have to offer visitors a more in-depth, quality experience that encourages them to stay longer so that the cost of fuel and air travel is a smaller proportion of the total cost of a trip."

ENDS

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