Airways NZ warns of fee increases

Airways New Zealand says the outlook for 2009-10 is uncertain. Photo / Simon Baker

Airways New Zealand says it may have to put up fees for airlines again if aircraft movements continue to drop below expected rates.

The state-owned air traffic control business yesterday reported an after-tax operating profit of $4.5 million in the year to June 30, sharply down on $10.5 million the previous year. This was in spite of a 4 per cent increase in fees for airlines and cutting business costs by $1.6 million.

Airways says it suffered its first domestic revenue fall since 1996 and in its annual report warns the outlook for 2009/10 is uncertain.

To reduce costs, projects have been halted, deferred or scaled down to high priority projects only.

"There may also be a need for a further price increase prior to July 2010 should aircraft movements continue to drop below the rate currently anticipated."

Chief executive Ashley Smout said he was hopeful increases could be avoided but this would depend on whether the decline in air travel had bottomed out.

Its return on equity last year was 9 per cent compared to an average of 19 per cent over the past 10 years.

Airways chairman Con Anastasiou said the company's result was still a solid performance given the effects of the global economic crisis.

"This past financial year will be remembered as the most economically challenging this generation has seen."

The International Air Transport Association estimates that the world's airlines will lose US$12 billion ($16 billion) in 2009, as falling demand, lower yields, broken consumer confidence and the swine flu pandemic threaten to wipe out US$80 billion in revenue, he said.

"The very nature of our business means our economic fortunes are inextricably linked to those of our customers."

Smout said rising labour costs, which increased from $79 million to $86 million, reflected the strong worldwide demand for air traffic controllers.

Airways paid a $6 million dividend to the Government.