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Air New Zealand is refusing to lower its airfares despite a fall in fuel prices - even after its main rival yesterday cut surcharges on transtasman and domestic flights.
Qantas said it would reduce its fuel surcharges on all domestic flights and some international flights by A$5 ($5.71) from next Tuesday.
The levy on flights from Australia to Asia, the Pacific and Honolulu would be cut to A$100.
Australian fares to New Zealand would also be reduced by A$5.
All Qantas Australian and New Zealand domestic flight surcharges come down to A$26.
But the surcharges on flights from Australia to Britain and Europe, and from Australia to the US, Canada, South America, South Africa and India would not be cut.
British Airways is also reducing fuel surcharges on many routes.
An Air New Zealand spokeswoman told the Herald yesterday the company would not reduce prices because it had not been able to fully recover its fuel costs. It had forward-purchased its fuel at higher prices than other airlines.
Air New Zealand's fuel surcharges are incorporated into its fares.
An Emirates spokesman said the airline had no immediate plans to cut its surcharge.
"The present surcharge still covers only about half of the incremental fuel costs borne by us," he said.
Pacific Blue spokeswoman Amanda Bolger said the company's fuel surcharges were already among the lowest in the industry so no further reductions were planned.
Pacific Blue charges an extra A$19 for domestic flights and A$35 for international flights.
The Flight Centre travel agency yesterday welcomed the Qantas move and urged the rest of the airline industry to reassess its fuel surcharges.
General manager Rick Hamilton said that when New Zealanders saw petrol prices coming down they expected this to be reflected in airfares.
"We are starting to see a general pattern of fuel surcharge reductions with a range of international carriers reducing prices over the past three months," he said.
Consumers Institute chief executive David Russell said travellers should not take notice of fuel surcharges.
"Consumers should be looking at the total cost of getting from point A to point B.
"It's been established in New Zealand courts that airlines should be including fuel surcharges in the base price in the airfare."
Air New Zealand could end up losing business if it continued refusing to lower its prices, he said.
Passengers should be able to expect fares to come down if the price of fuel was falling.
Qantas executive general manager John Borghetti said the reduction was linked to lower jet-fuel prices.
"We reduced international surcharges in October and we have been monitoring oil prices closely since then," he said.
"With the more recent fall in the price of jet fuel, we can now extend the surcharge reduction to domestic fares, as well as make further reductions on some of our international routes."
Air NZ said its fuel bill this year would be about $1.1 billion, up from about $900 million last year and $480 million three years ago.
In July, the price of crude oil peaked at US$78.40 a barrel. Last week, it hit a 19-month low below US$52, and yesterday it was at US$52.38 a barrel.
