New Zealand is facing the risk of losing the services of some of the world's biggest airlines as operation costs go up and passenger demand drops due to the coronavirus outbreak, according to the Board of Airline Representatives (BARNZ).
In a statement following its annual meeting, BARNZ warned that proposed cost increases for airlines landing in Aotearoa on top of reduced demand may have a double-whammy effect on traveller numbers.
The BARNZ board is made up of 28 airlines that fly within New Zealand airspace.
The group welcomed the government's $11 million stimulus to help the tourism sector but said the costs being passed on to passengers would not stimulate demand in the current coronavirus affected industry.
"I don't think passengers realise how much of their air ticket is made up of fees and levies," said Justin Tighe-Umbers, executive director of BARNZ.
Less than half of a typical airfare total paid by passengers goes to the airline.
As an example, here's a breakdown of who gets what, on a $400 return ticket to Australia:
- Airport infrastructure charges: 23 percent ($92)
- Government levies and taxes: 26 percent ($104)
- Air traffic control: 4 percent ($16)
- The airline gets the remaining 47 percent ($188)
"In the past decade border agency costs in NZ have gone up around 89 percent and airports' up 16 percent," Tighe-Umbers said.
"BARNZ members believe these increasing border costs for airlines and passengers are not sustainable in the long term."
The international air travel industry is taking a massive hit from the current coronavirus crisis, with airlines around the world rapidly consolidating routes and claiming large drops in route profitability.
In Singapore, the government has taken steps to protect its aviation industry including a six month support package valued at approximately NZ$130 million to help cover the cost of landing fees and ground services, as well as rental payments at Changi Airport.
BARNZ has said the New Zealand Government could look at doing something similar.
"This country needs to ensure it remains a profitable route for airlines," Tighe-Umbers said.