Air New Zealand has confirmed it is cutting back on some of its domestic services in response to a drop in passenger numbers, and says rising costs such as fuel could lead to an increase in airfares.
"From July we will begin making some mostly off-peak frequency reductions to on our domestic trunk routes plus some regional services," A spokesperson for the airline said on Tuesday.
The changes will apply to the airline's services out of Nelson, Napier, New Plymouth, Palmerston North, Blenheim and Tauranga and will result in a reduction in domestic capacity of around 2 percent compared to last year.
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The spokesperson said the sustained rise in the cost of fuel and other costs such as airport landing fees mean its reviewing some airfares across its domestic and regional network, but says its lead-in airfares announced earlier this year will remain unchanged.
In February Air NZ released new domestic airfares from as low as $39.
A 'lead-in' airfare is where a ticket price starts from, and there are usually only a handful of seats on an aeroplane that can be sold at the price.
As more people book seats on the flight and availability drops, prices increase.
Brent Thomas from House of Travel said the cheaper airfares may not have stimulated enough demand to keep some of the airline's services operating.
"Airlines have to stimulate demand when there is a lack of it, and one of the things they can do is pull pricing around for that. However, by reducing their capacity or saying they're going to reduce their capacity would tend to suggest it hasn't gone to the levels that are required to make a profit for some routes," he said.
Details on which routes may be affected by the airfare changes will be released once the review has been completed.