Source: Radio New Zealand
The fuel price crisis “is no longer a short-term situation” for airlines while the government is promising to hold oil companies accountable.
The Board of Airline Representatives chief executive Cath O’Brien told Morning Report that New Zealand does not have a supply problem, it has a price problem as uncertainty in the Middle East continues to spike all fuel costs and disruptions to air travel.
She said airlines that fly to New Zealand are very committed to the market, but hard decisions will have to be made where route profitability is unsuccessful, or if demand drops away.
“This is certainly no longer a short term situation,” O’Brien said. “We are starting to see this fuel price as something that is going to be quite elevated for quite a long time.”
On Wednesday the latest government update showed that fuel supplies in New Zealand dropped by three or four days across each type but remained stable.
O’Brien said cutting routes was “among the last things” that the airlines wanted to do but difficult decisions would have to be made as this was now an ongoing issue.
“Airlines could reduce services, frequencies, they could hypothetically come off routes. I don’t really see that I think airlines will do all they can to actually stay connected to New Zealand, that’s really what we’re in the business of.”
At the end of last month, a Jetstar NZ spokesperson said 12 percent of scheduled services had been impacted, including some services between Auckland and Christchurch as well as Auckland and Wellington, and some international flights between Auckland and Sydney and Auckland and Brisbane.
Air New Zealand also earlier said that it would cancel around 1100 flights from early March through until early May, but that most passengers would be moved to flights on the same day.
On Tuesday ABC reported Quantas also announced it will cut domestic flights due to higher fuel costs and the uncertainty of the Middle East war, with as much as AU$800 million (NZ$966m) in extra fuel costs.
O’Brien said it was difficult to predict what ticket prices were going to be in the future as it was also difficult to predict the costs of Jet fuel.
“I think it is reasonable to say that we’ve already seen some price increase in ticketing, and it is likely that we will see more of the same.”
She said airlines are coming into the period where they are planning their routes for 2027 and will be doing this in the knowledge that fuel prices are potentially going to be 100 percent higher.
O’Brien had worked through the Covid period as well and said the current fuel crisis presents one or two main issues, whereas Covid had multiple.
“In New Zealand we do not have a supply problem for jet fuel we have availability of supply here and out into the future months, but we do have a price problem for fuels not just jet fuel.
And I think that is the problem that we are going to have to manage is the price issue.”
‘Continuous price problem’- Shane Jones
Associate Energy Minister Shane Jones told Morning Report that the main issue was with the cost of fuel and it was going to be a “continuous price problem”.
The latest fuel stock figures – accurate to midday Sunday – showed 56.3 total days of petrol, 45.4 days of diesel, and 47.0 days of jet fuel either in country or expected to arrive in the next three weeks.
That was down from the 59.7 days of petrol, 49.1 days of diesel and 50.7 days of jet fuel reported on Monday – which was also a decrease.
Jones said that in 2024, oil companies pledged New Zealand would not suffer any major crisis because of an absence of fuel and the government would hold them accountable.
“If they do not obey and maintain the law, the punitive fiscal costs on them are enormous.”
He said the government had put money forward for additional storage capacity which will come online at Marsden Point in about four or five weeks at the end of May.
“So it’s really important for the credibility of these major players, one of them is an Australian listed company, Ampol, that they abide by their word, because the public has a great deal of trust invested in the system.”
He said while the issue was mainly with the cost of fuel, the government had explored the options for the Crown to work with the import companies and bring “more molecules” to New Zealand.
Jones said the government was working closely with Australian advisers and politicians and the Prime Minister has been in “regular contact” with leaders in Singapore as part of the fuel response.
He believed the government was doing all they can.
“I do genuinely believe that we’ve left no stone unturned… And I’ve seen no information that would cause me to believe that the actions of the fuel companies means that they are failing their statutory test.”
Prime Minister Chris Luxon said on Wednesday that fuel importers were continuing to report “no material issues with future orders or future shipments”, and the government had reassurances about orders to the end of May, as well as planned orders through to end of June.
“We are staying at phase 1 of the national fuel response plan, but the ceasefire is fragile and the Strait of Hormuz remains effectively closed, so the risks to New Zealand’s fuel security is still elevated.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand