Surcharge on aviation fuel tests importers' patriotism

By DANIEL RIORDAN Aviation Writer

Angry importers hit by higher charges from Air New Zealand say the airline should be left by the Government to fly or die on its own merits.

The national carrier, 82 per cent owned by the Government, decided last month that it could not afford to forgo the extra revenue it had been earning from a "temporary" fuel surcharge introduced two years ago to help offset record aviation fuel prices.

Adding insult to injury, Air NZ from yesterday has started charging importers and exporters a permanent document handling fee of $20 (plus GST) applied to all international waybills processed through the company's terminals in Auckland, Wellington and Christchurch.

Two of Air NZ's biggest competitors - Qantas and British Airways - dropped their temporary fuel surcharges last month and United Airlines reduced its by 30 per cent after fuel prices dropped.

But Air NZ told its customers it would be incorporating its surcharge into its normal pricing schedules as it could not afford to lose the extra revenue.

The surcharge ranges from 10c to 30c a kilo, depending on distance travelled. The airline declined to reveal how much revenue the fuel surcharge was earning it, citing commercial sensitivity.

The airline spent $1.3 billion on fuel last financial year, representing 20 per cent of operating costs.

In a letter to customers two weeks before Christmas, Air NZ said its commercial viability was still at risk.

"We hope you will understand the necessity for such a move in the light of the challenges that Air NZ must address at this time - and that we will be able to count on your continuing support."

But Air NZ cannot, says Daniel Silva, the Importers Institute chief executive. He is advising his members to switch to competing airlines and is using Qantas for his own freight-forwarding and customs- broking firm.

Mr Silva says importers and exporters are starting to pay for the "dubious benefit of the state owning a commercial airline" and the Government, which has pledged another $150 million to Air NZ on top of the $885 million already given, "should stop throwing good money after bad".

"We say it's not too late to let this failed airline collapse. Let someone who knows how to run an airline pick up the pieces."

Air NZ's vice-president (cargo), Howard Jellie, declined to comment, but in a statement to the Shipping Gazette he described the retention of the fuel surcharge revenue as "a responsible commercial decision under the current circumstances".

An Employers and Manufacturers Association (Northern) spokesman, Bruce Goldsworthy, said the fuel surcharge decision had raised eyebrows - more for how it was done than its impact on profitability.

While Air NZ's "opportunism" was understandable, "appeals to patriotism to support the airline will only go so far", said Mr Goldsworthy.



The big issue for exporters was Air NZ's reduced cargo capacity, dating back to November, he said.

Then, the airline increased its cargo charges to most international destinations by 10 per cent and began flying smaller cargo planes on flights out of Christchurch, reducing available cargo space for South Island exporters by almost 50 per cent.

That caused more cargo to be sent to Auckland for export, also causing problems for North Island exporters.

The document handling fee will have less direct impact on exporters, some of whom had been paying a $25 waybill fee, which is being scrapped with the introduction of the new measure. But they have less flexibility than importers when it comes to switching between airlines.

Mr Goldsworthy said the fee was not a big issue for most exporters, whose consignments started at about $5000.

Air NZ said the document handling fee reflected its heavy investment in warehouse storage capacity, new call centre and inventory software, computerised handling systems and additional equipment.

It said the decision to introduce the fee had been taken before September, when the airline reported a $1.4 billion loss and the industry's financial woes were compounded by the terrorist attacks on the US.