Air NZ is faring well without cuts

Qantas has cut fares after a drop in jet fuel prices but Air NZ isn't planning to follow suit. Picture / Reuters

Air New Zealand has no plans to match a drop in international fares by rival Qantas after a fall in jet fuel prices.

Qantas said this week it would decrease its fuel surcharges on all flights out of Australia from next week in response to lower oil prices.

But Air NZ spokesman David Jamieson said his company was not considering a fare drop because it was confident its product was strong enough to compete against Qantas's.

The airline's customer satisfaction levels were "tearing away" due to the improvements to its long-haul fleet.

However, Air NZ would continue to keep a close eye on the "fuel price and the effects on demand".

Jamieson said jet fuel had eased in price but it was still extremely high and the airline's customers had been protected from that.

"We have worn the cost. The public has been insulated to a large degree by the true price rise by the gains we have made in our hedging programme."

Air NZ's airfare price rises to offset jet fuel increase over the last financial year had lagged behind the "true cost of fuel to its business".

The Commerce Commission has ruled that Air NZ must not include a fuel surcharge as a separate part of its fare pricing structure. Instead, any extra charge for fuel must be incorporated into the actual ticket price.

Qantas chief executive Geoff Dixon said on Thursday the fuel surcharge on fares to the United Kingdom and Europe had fallen A$15 to A$170 and trips to the United States, Canada, South America, South Africa and India were down .

Fares to Asia, the Pacific and Honolulu would attract a $105 surcharge, down A$10, and those to NZ would carry a A$60 levy, down A$5.

Dixon said the cost of fuel remained the biggest challenge but he still upgraded its profit guidance.