Air fares set to be raised again

Air New Zealand, fresh from reporting a flat profit of $166 million for the past year, is set to announce a second round of fuel-related fare increases.

The airline's after-tax profit is the same as last year, but debt has fallen, cash reserves are up to more than $1 billion and dividends are expected to be paid again next year.

Qantas said last week that it would add up to A$22 ($23.85) to the cost of flying an international sector. An A$10 surcharge is being added for services within New Zealand. Similar increases are expected from Air NZ today.

In May the Australian carrier introduced fuel surcharges and Air NZ followed suit a day later.

Releasing financial results for the year to the end of June, Air NZ yesterday showed that the high New Zealand dollar shielded it from the worst effects of world fuel prices. However, fuel costs have risen further, and with its main competitor increasing fares, Air NZ will see little risk in another increase.