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More seats despite Pacific Blue departure -- Fyfe

Fuseworks Media
Fuseworks Media

Auckland, Aug 26 NZPA - Air New Zealand says there may be more seats available for domestic passengers in New Zealand rather than fewer, despite Pacific Blue flying out of the market.

Pacific Blue said it would abandon the domestic market from October 18, leaving Air New Zealand and Jetstar as the main operators.

But Air New Zealand chief executive Rob Fyfe said while announcing yearly results today that there would now be more aircraft in the market.

"With Pacific Blue having exited two aircraft from the NZ market, we've already announced that we're bringing in the equivalent of two new aircraft," Mr Fyfe said.

"Jetstar has announced that they are also bringing two new aircraft into the market, so double the capacity is coming in to what has left.

"We are both going to be working hard to fill those seats, so I think the competition will be very, very vigorous."

Mr Fyfe said the reduction in major competitors in the market to two was unlikely to lead to an increase in prices.

"The way to lose money in this business is to fly around half-empty aircraft," he said.

"The price of airline seats is ultimately dictated by how challenging airlines find it to fill their seats, so if their aircraft don't fill up, we drop the prices to try and stimulate more people to travel."

Air New Zealand will be increasing its Auckland-Dunedin services from 13 per week to 19.

The number of Auckland to Queenstown services were going up 13.6 percent, Auckland-Wellington up 9 percent and Auckland-Christchurch up 10.4 percent.

The arrival of larger new 171-seat A320 aircraft would also help, Mr Fyfe said.

Air New Zealand reported normalised full year earnings before tax falling 6 percent to $137 million, amid subdued demand for air travel in tough economic conditions.

Operating revenue for the year fell 12 percent or $563m to $4 billion, although when the unfavourable impact of the strengthening New Zealand currency and discontinued freighter operations were excluded, it fell 8 percent.

Passenger revenue fell by $429m in the year to June, due to a 7.1 percent fall in yield and a 4.7 percent demand decline, measured in revenue passenger kilometres.

Mr Fyfe said a wide range of business initiatives were under way, including significant capacity growth in the coming months.

He also said work was being done to try to improve the company's position for the rugby world cup and beyond, which could include borrowing aircraft from other airlines.

The company was waiting for regulatory approval on both sides of the Tasman for a proposed trans-Tasman alliance with Virgin Blue, which would enable Air New Zealand to compete more effectively against the Qantas group in the Australasian market.

Its bottom line net profit for the latest year was $82m, compared to $21m a year earlier.

A final dividend of 4c a share is to be paid, from 3.5cps last year, taking the full year dividend to 7cps.

Air New Zealand shares were up 5c, or 4.13 percent, to $1.26 by 5.30pm today.

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