Air NZ profits may not mean airfare savings


Air New Zealand profits have soared, but that may not mean cheaper airfares for travellers.

The airline's announced its six month profit results today which have increased 154 percent to $338 million dollars.

But those expecting immediate savings on airfares could be disappointed.

Air New Zealand chief executive Christopher Luxon wouldn't commit to blanket price cuts, only relying on competition to keep airfares in check.

"Air NZ has done an exceptionally good job, not just in the last three years, but over fifteen years, making sure that we compete very, very strongly. All I can say is expect Air New Zealand to compete strongly."

But one travel agency believes that's enough to drive airfares down.

Flight Centre Spokesman Chris Greive says "there's every indication that there'll be more airlines flying to New Zealand, it's a very popular destination at the moment. Very competitive environment, meaning good fares for everyone"

So what will be done with those bumper profits?

Mr Luxon says there'll be more investment back into the business. "If you think about it in the next three and a half years we've got $2.3 billion dollars of new aircraft coming in. We've got to invest in making sure our lounges for our highest value customers are working incredibly well, and we're obviously investing in new technology as well, so that our staff can be freed up to offer even greater levels of customer service."

On-board Wi-Fi is also being considered, to keep up with the likes of Qantas and Emirates.

The airline says the half year result was partly driven by a 16 percent increase in passenger numbers, and lower aviation fuel costs. 

But it's not just Air New Zealand reaping the benefits of cheaper fuel -- with United Airlines and American Airlines also among others to increase competing services.

Air New Zealand is embracing it.

"We love competition ... go back and look at the past fifteen years ... we're great street fighters we love taking on much bigger airlines than ourselves and we end up winning and competing incredibly strongly"

Air New Zealand says competition won't hinder its growth, and is expecting it's full year before tax earnings to exceed $800 million dollars.