Express service success shows NZ aviation market price sensitive – Cullen

“The better-than-anticipated success of Air New Zealand’s new low cost structure demonstrates how price sensitive the New Zealand market is, and the advantages to Air New Zealand of keeping prices down,” Finance Minister Michael Cullen said today.

Dr Cullen was commenting on Air New Zealand’s announcement to the stock exchange that its pre-tax profit expectations for the current financial year were now $30 million higher than earlier indicated.

“The additional earnings reflect higher than expected demand as New Zealanders have flocked to take advantage of the airline’s cheaper flights. Clearly much of that travel is discretionary, and would not happen if fares rose.

“This creates a strong commercial imperative on Air New Zealand to resist fare increases and should reassure those people who are concerned that the proposed strategic alliance between Air New Zealand and Qantas will lead to price rises,” Dr Cullen said.

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