Air New Zealand Fare and Capacity Changes

Media Release
6 June 2008

Air New Zealand Fare and Capacity Changes

Air New Zealand today announced a range of pricing and capacity changes in response to the continued high cost of fuel and changes in demand.

“The airline industry faces sizeable challenges in this rapidly changing economic environment and we continue to review all aspects of our business including fares, network and costs,” says Air New Zealand Chief Executive Officer Rob Fyfe.

“With jet fuel remaining at very high levels it is critical we adapt our business in response, including fare adjustments to recover these significantly increased operating costs.”

The price of domestic airfares will rise by an average 4% as will international airfares sold in New Zealand, Australia and the Pacific Islands. Domestic and short haul international increases are effective from 16 June with long haul expected from 20 June.

“As a small, nimble operator we have the benefit of being able to quickly adjust schedules to maintain a cost effective operation that ensures capacity meets current demand in the markets we serve,” says Mr Fyfe.

“Relative to other airlines Air New Zealand is well positioned with superior product, a network primed for growth, a relatively young fleet and great people. However we are not immune to changes in demand and sky-rocketing fuel costs.”

Air New Zealand will make a number of tactical network changes including:

• Reducing services by one per week between Japan and New Zealand during the lower demand months of September, October (from nine to eight per week) and November (from 12 to 11 per week).

• Removal of the two-times per week Auckland-Hong Kong service operated seasonally during December and January. Hong Kong will continue to be serviced with its year round capacity of a daily 747-400 operating Auckland – London via Hong Kong.

• As a result of continued strong passenger demand, from October several Auckland – San Francisco services per week will be up-gauged from a 313 seat 777-200 to a 379 seat 747-400.

• Capacity on the Tasman has also been reviewed during lower demand months. Between August and November services from Hamilton to Sydney will reduce from three to two per week, and between September and November services from Dunedin to Sydney will reduce from three to two per week. Services on both routes will return to three per week from late November. Services between Wellington and Sydney during the month of August will reduce from a total of 44 to 36.

ENDS

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