Why higher fuel costs mean more expensive plane tickets and less flights for NZ

By Nona Pelletier of RNZ

Forward bookings by international air travellers have gone soft after the initial spike, following last month's easing of border restrictions.

The Board of Airlines Representatives (BARNZ) said the phased extension of the government's subsided air freight subsidy through to March 2023 would help smooth the return of international passengers, but not enough to see all international airlines return.

"Unfortunately, we're starting to see the decline in forward bookings now," BARNZ aviation development manager Patrick Whelan said, adding March was a crucial period for forward aviation network planners.

"And when you look at our country, with say for instance, a 17-hour flight and with fuel at an all-time high, and the carrier's bringing in all-time low load factors, we're not seen as a very desirable place to fly to."

Whelan said the government would need to make a call soon on border settings, but was "extremely hopeful" BARNZ had made a case for a full reopening to international travel in line with other countries, such as Australia and the United States.

"Yes, we made the case from a public health perspective, there's very, very little risk of opening the border up to the foreigner travellers," he said, adding BARNZ was expecting to hear back from the government on a decision shortly.

Without certainty, he said many international airlines would not schedule a resumption of flights.

"Network planners will be deciding on do we fly down to our country? Do we send a 17-hour flight down here with fuel being at an all-time high?"

Whelan said the recent spike in fuel meant it would not be economic to send flights to New Zealand under current border settings, particularly as not every airline was eligible for the $250-million extension to the government's freight subsidy.

In any case, he said rising fuel costs would drive up the cost of passenger air travel.

"The airlines are absorbing as much as the [fuel] cost that they possibly can," he said.

"They are very conscious to restart our sector they need to keep airfares as low as possible. But there will come a time unfortunately, when they will have to pass costs on."