Air New Zealand cancels regional flights over costs
Sydney (30 April)
Air New Zealand has cancelled dozens of New Zealand regional flights in July because of high jet fuel costs – following multiple rounds of flight cuts in March – the company said on 30 April.
“The [cancellations] affect around 2% of passengers due to travel across [July],” an Air New Zealand spokesperson told Lithos today. “We’ve targeted the [cancellations] to minimise disruption and to ensure that the vast majority of impacted customers can still travel on the same day,” they added.
Air New Zealand’s cuts will impact 23 flights between Nelson and Auckland, 32 flights between Nelson and Wellington, and 15 flights between Nelson and Christchurch, Nelson Mayor Nick Smith said in a social media post.
Air New Zealand notified Smith of the cancellations but has not revealed the other routes affected by its decision.
“[Air New Zealand’s decision] is likely to affect seat availability and prices as well as reduce [its] ability to manage disruptions, including weather-related delays and cancellations,” Smith added.
Air carriers have cancelled 266 flights headed to or from Nelson, impacting about 12,000 seats, since the start of the US-Israeli war in Iran, according to Smith.
Refined oil prices spiked in early March because Iran closed the Strait of Hormuz – a vital crude oil passage – in response to US-Israeli attacks.
Jet fuel prices, specifically, increased from $85/barrel - $90/barrel (A$112/barrel – A$126/barrel) in February to $150/barrel - $200/barrel in early March, Air New Zealand told investors on 10 March.
Air New Zealand’s fuel costs have likely increased since early March. Futures prices for Brent crude oil – which refiners process into jet fuel – hovered at $111.61/barrel on 30 April, up from $87.80/barrel on 10 March, data from Trading Economics show.
Air New Zealand had planned to consume 2.9 million barrels of jet fuel in March-June, it said on 10 March. But it has since announced multiple rounds of regional and Trans-Tasman flight cancellations.
New Zealand had 32 days’ worth of jet fuel reserves in the country on 26 April, up from 25 days’ of reserves on 22 April, data released by MBIE on 29 April show. The country’s overall jet fuel stock levels remain sufficient, the country’s Resources Minister, Shane Jones, told Lithos at the time.
Fuel suppliers have also assured air carriers - including Virgin Australia - about fuel supplies into June, Lithos has learned.
But planned future jet fuel deliveries into New Zealand have slowed over the last week. Ships carrying 17 days’ worth of jet fuel reserves are set to arrive in the country over the three weeks from 26 April, down from the 21 days’ worth of reserves set to arrive over the three weeks from 22 April.
The New Zealand Government will consider additional measures to boost jet fuel supplies if distributors struggle to access supply, Jones told Lithos.
By Avinash Govind