NZ News
Air Chathams announces $20 fuel surcharge on fares
Taranaki’s tourism arm has been having an early morning meeting to go over what it can do to stem any cuts to Air New Zealand’s flights.
New Plymouth mayor’s Max Brough is blasting the airline for a second day after it announced it may have to adjust its network and schedule amid high fuel prices.
“At a personal level, I’m a loyal dog by nature and I’m struggling to get that loyalty kindled when they start treating us like this all the time, to be honest,” Brough said.
He told Morning Report 1000 people a day go through the city’s airport and the prospect of cuts of timing changes was “a bit of a worry”.
“We just can’t have it,” he said.
“We’ve all been encouraged to up the standard of airports, and we’ve all gone through them. I think we’ve spent about $60 million on ours in the last few years and it’s largely paid for by arrivals, by landing costs,” he said.
“But when I look at this picture, regional airports get the whipping all the time, that’s how it appears to me.
New Plymouth mayor Max Brough Photo: LDR /Te Korimako o Taranaki
“We’ve sort of become price takers in this equation and if I sit back and I look at it, I go, what are Air New Zealand doing for us as regions?”
Air New Zealand has not said whether its potential changes to its network and schedule would be on domestic or international routes.
However, Brough said the potential changes did not sit well with him.
New Plymouth airport Photo: New Plymouth District Council / Supplied
The mayor said Air New Zealand was a key partner for the region and the airline could expect to hear from it in the coming days.
He fired a warning at the airline, saying other airlines could operate in the city.
“Just because they don’t now doesn’t mean to say they couldn’t in the future,” he said.
“We’ve got to stop accepting the status quo, that’s my view.”
“You never know whether your plane’s going to turn up and go on time, you just about have to allow the drive time when you’re booking your flight in case your flight doesn’t run.”
$20 surcharge for regional airline’s fares
Regional airline Air Chathams has announced it is introducing a $20 fuel surcharge on all flights due to increased aviation fuel prices.
The announcement came a few hours after Air New Zealand raised its fare prices on Tuesday, adding it could be forced to raise them again and review routes.
In its statement, Air Chathams said aviation fuel prices in New Zealand “have risen significantly” due to the war in the Middle East.
The critical Hormuz Strait, a shipping route for up to 20 percent of the world oil is essentially closed due to the conflict in the region.
The price of jet fuel has been fluctuating wildly since the conflict broke out, and has at times gone up more than 120 percent.
Air Chathams’ $20 charge will be added to ticket prices at the time of booking but will not apply to existing fares.
“This surcharge will be reviewed regularly and will be removed once fuel prices return to more normal levels,” the airline said.
Air New Zealand was raising one-way economy fares by $10 on domestic routes, $20 on short-haul international services and $90 on long-haul flights, with further price, network and schedule changes possible if jet fuel costs remain elevated, according to a Reuters report.
The national carrier has suspended the earnings guidance it issued less than two weeks ago because of what it said was unprecedented volatility in jet fuel markets.
Jetstar will also be increasing prices on international routes. RNZ has approached the airline on Wednesday seeking more information.
Qantas has confirmed on Wednesday that it has increased international fares, and was exploring options to redeploy capacity to Europe as airlines seek to evade disruptions in the Middle East.
“These increases will vary from route to route.
“We are continuing to closely monitor the impact the conflict in the Middle East is having on the volatility in jet fuel prices, which have risen by up to 150 per cent over the past fortnight. Despite hedging, this is driving up costs across the group.”
Singapore Airlines has raised fares to Europe by $140 for a return ticket, Reuters has reported.
Capacity in Auckland for more public transport users
Auckland Transport says it has enough capacity if more people turn to public transport as prices rise at the pumps.
AT public transport director Stacey van der Putten said it’s already a busy time of the year and it’s waiting to see if more people use public transport.
She expected people would be considering the option and there was still space if they do.
“If we all do change how we travel, even if it’s just for a little bit, that does make a big difference in terms of the overall supply chain and how it works.”
She told Morning Report rising diesel prices would also affect the city’s bus operators.
However, a quarter of the bus fleet is electric, making it more resilient than it used to be.
Warning ‘substantial price rises’ may be on horizon
A major retailer is warning prices could rise as the cost of shipping increases because of the conflict in the Middle East.
Key energy supplies and major shipping routes, such as the Strait of Hormuz, are being disrupted, adding fresh inflation pressure worldwide.
Briscoes managing director Rod Duke told Morning Report shipping companies have imposed surcharges and he was expecting future deliveries of containers would have surcharges of 10 to 15 percent.
Rod Duke Photo: RNZ / Cole Eastham-Farrelly
While his business would absorb some of the cost, eventually it would need to be passed on to consumers.
If the Iran war continued for a period as long as 90 days Kiwis would definitely feel the impact on their wallets, with “substantial price rises”.
There could also be significant delays in receiving goods because of the disruption to shipping which could add 30 days to travel time.
Duke said the conflict also shaped as “a spanner in the works” for New Zealand’s economic recovery.
“It largely depends how long this is going to go for.”
There would be an inflationary impact from the rising costs of fuel which could flow through to interest rates and there was little New Zealand could do, he said.
Looking at the country’s infrastructure Duke said with the US government “playing sheriff around the world” and other instability, he regretted that New Zealand no longer had an oil refinery and wasn’t making much use of the Taranaki oilfields.
“Why a country like this can’t refine its own oil rather than rely on other countries’ third parties to have done is really beyond me.
Source: RNZ
Latest News
Opportunities to mitigate multi-million-dollar RNZ budget blowout likely missed – experts
Multiple opportunities to identify and mitigate a multi-million-dollar budget blowout at RNZ appear have been missed, according to the former executive director at Audit New Zealand.
The public broadcaster on Monday revealed a near $12 million shock financial loss after a litany of financial blunders, which will now lead to sweeping job cuts.
The $11.8m loss is more than 25 times the $470,000 RNZ had expected to lose over the year to June.
CEO Paul Thompson took responsibility for the result, and said internal reports gave an inaccurate picture of the finances, meaning the scale of the loss only became clear in October.
RNZ’s former chief financial officer Hilary Parker resigned unexpectedly in early October.
The board said it would commission an independent review into what went wrong.
Independent contractor Stephen Walker, who left the Audit Office earlier this year, said the size of the loss was surprising, as was the length of time it took to identify it – months after the financial year ended.
Supplied / OAG
“Probably more of a concern is that they had seemingly been unaware that they were running up a significant deficit until they were in the preparation stage of their annual report in October.”
Walker said public entities typically produced monthly financial reports.
An interim audit also took place before the end of the financial year, he said, but if the organisation hadn’t identified significant losses at that stage, the auditor could also be in the dark.
“It seems that there’s a real weakness in forecasting and budgeting that’s occurred here and that the monthly accounts, when they’re produced, either haven’t identified these significant variances against budget or the magnitude of them really hasn’t come to light until right towards the end of the financial year,” Walker said.
“And really at that point, there’s no opportunity for the chief executive, the leadership team to take, and the board to take, any corrective action because the year has effectively been completed.”
Walker said the “significant miss” was difficult to account for given it was more than 10 percent of RNZ’s total funding.
He said based on RNZ’s annual report, financial complexity didn’t appear to be a factor.
“This $11.8m loss isn’t made up of one particular item … it seems to have been contributed to by a number of separate expense lines running over budget. So I don’t think it’s necessarily to do with complexity.”
Among the errors, RNZ wrongly counted $2m from land sales as income in its budget. Staff costs also came in $3.2m over budget, including $1.4m in redundancy payments.
Professor at Auckland University’s business school Norman Wong said based on media reports the issues identified were “significant and troubling”.
Supplied / University of Auckland
“But recognising the sale of land as income in their budget is a basic error that one would have expected to have been caught and corrected well before it got to this point.”
With funding reductions at RNZ over the past two years, Walker expected greater scrutiny of financial results.
“Virtually every public entity has had their annual budget reduced. And so you would expect … the leadership team on a monthly basis and board – I’m not sure how frequently the board will consider the information – but you would expect them to be interrogating the results on a regular basis throughout the year,” he said.
Walker said initiating an independent review was the correct course of action and that he’d want to understand what information the leadership team and the board were regularly receiving.
He said he’d “love to say” surprising financial results were rare, but conceded they occured on a semi-frequent basis during his time leading the Audit Office.
“The benefit of independent scrutiny by the Audit Office – and the auditors providing that support to the Auditor General – [is] that the reporting is fairly presented at the end of the year, whether it’s good, bad or ugly.”
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