KEY POINTS:
Air New Zealand is confident it can withstand competition and high oil prices but it worries about the attractiveness of New Zealand to environmentally conscious foreign tourists.
"The market does look uncertain," Air New Zealand chief executive Rob Fyfe told Parliament's finance and expenditure select committee.
But he said Air NZ had a strong balance sheet and a world class product. "If we see any downturn in demand, assuming we can maintain demand for the destination and the attractiveness of New Zealand, we believe we are well positioned to perform strongly relative to our peer group," he said.
The airline has signalled it expects its financial performance in the year ended June 30 to be better than last year but since then the oil price has risen by US$20 ($25.4) a barrel.
He said the airline did not have "undue confidence" about its position but it believed it was well-positioned in the current environment.
"The biggest challenge is maintaining the attractiveness of New Zealand as a destination," he said.
Fyfe said research in the United Kingdom showed that 38 per cent of passengers considered their carbon footprint when they fly.
"New Zealand has seen a decline in tourism numbers out of Europe in the last 12 months. There is no direct correlation at this early stage between environmental issues and that decline in inbound tourism.
"But it is something that genuinely concerns us and much of what we can do here in New Zealand in terms of adventure is available in shorter haul destinations," he said.
It was important therefore for the airline to be seen to be taking an environmentally responsible position. The airline was buying more fuel efficient aircraft and had announced a scheme which allowed customers to offset their carbon footprint.
The carbon offset scheme announced last week would allow passengers to buy carbon credits from a Manawatu wind farm for up to $88 for a long-haul trip. Passengers can also donate to an environment trust.
Fyfe said other airlines' offset schemes had the support of just 1 per cent to 2 per cent of passengers but Air New Zealand hoped up to 5 per cent would support its scheme because the results were more visible.
The cost of jet fuel used by the airline had risen from US$30 a barrel five years ago to US$130 a barrel. The airline used nine million barrels of fuel a year, so the fuel bill has increased by US$900 million a year in five years. Some of the cost had been offset by hedging.
"Contrary to popular belief our business works better on a commercial footing with lower fares and more passengers," Fyfe said.
Chairman John Palmer said having the Crown as a major shareholder had not been a major issue for the airline and the relationship with finance minister Michael Cullen "has worked well". He said that more liquidity in the number of shares would improve the share price.
Shares closed up 5c yesterday at $1.36.
AIRPORT UPGRADE ARRIVES
The official opening of the international arrivals area at Auckland Airport today marks a milestone in the $155 million upgrade of the terminal due for completion this year.
The area features new decor and leads through a new 1600sq m duty free store to 12 more immigration passport control counters, taking the total to 44.
It was opened to passengers three days ago.
Auckland International Airport chief executive Don Huse said feedback from passengers had been good and the DFS duty free shop's trade had been up significantly.
Counters at the new passport control area was being phased in as part of the the effort to reduce bottle necks at peak times.
A second stage of the arrivals expansion, due to be completed in June, will see expansion to the baggage hall and Ministry of Agriculture and Forestry Biosecurity processing area.
The international terminal Pier B project will be completed by the end of September and will provide two more gates, each with two aerobridges, making four in all.
This will increase the total aerobridges at the international terminal to 14. On each of these new gates two aerobridges can service two double decker A380 or B747 aircraft at the same time; or four single aisle A320 or B737 aircraft.
Emirates will fly A380s across the Tasman from next February.
The airport handles around 12 million passengers a year and is aiming to double that by 2025.
- NZPA, staff reporter
