AIANZ is warning that rapidly escalating fuel prices are creating a very serious situation for the aviation sector, with growing risks to emergency services, regional connectivity, and airline viability.
New Statistics New Zealand data shows domestic airfares rose 12.8% in February, before the recent escalation of conflict in the Middle East. AIANZ says this reflects long‑standing cost pressures on airlines, now compounded by unprecedented fuel price increases.
Speaking on TVNZ Breakfast, AIANZ Chief Executive Simon Wallace said airlines were already operating in a tough economic environment, with supply chain constraints and rising costs affecting both regional carriers and Air New Zealand.
Fuel prices surge
Fuel prices rose sharply last week, with further increases expected:
Jet fuel: up 96 cents per litre
Avgas: up 36 cents per litre
Airlines are reluctant to pass these costs on, but some operators are now considering fuel surcharges of around $20 per passenger. Air Chathams has reported its monthly fuel bill increasing by approximately $250,000.
“These are exceptional increases,” Simon said. “The industry operates on very fine margins and cannot absorb cost spikes of this scale.”
Emergency services at risk
AIANZ is particularly concerned about the impact on critical aviation services, including air ambulance operations, firefighting, and disaster relief. Operators contracted to Fire and Emergency New Zealand (FENZ) are currently unable to pass fuel cost increases through under existing contracts.
“Without a mechanism to recover these costs, essential services are at risk,” Simon said.
Call for targeted government action
AIANZ is calling on government to consider targeted, temporary relief, including scrutiny of CAA levies, air traffic control charges, and airport landing fees, which can make up up to 20% of a domestic airfare.
Some regional services, including Air Chathams and Sounds Air, have already been reduced. AIANZ warns that without action, further cuts to regional connectivity and essential services are likely.
“This is now a day‑by‑day situation,” Simon said. “We are engaging with government to ensure critical aviation services and regional connectivity are protected.”