The price of domestic flights won't be lowering any time soon with Air New Zealand revealing they've had to increase the cost to keep up with inflation.
Air New Zealand flight prices are up 20 percent domestically and 50 percent on some international routes.
The airline's CEO Greg Foran told AM on Tuesday they made the choice to up the price because they need to get on top of demand as well as rising costs of fuel and inflation.
"We've got a situation with demand being pretty high, people very keen to travel - we saw that yesterday when we launched Bali - and us just not having the same amount of planes available to fly," Foran told AM co-host Ryan Bridge.
"We're bringing them back as quickly as we can, we have of course got a mix of inflation coming in there, included in that is fuel and the solution at this point is for us to get more capacity out there so there are more seats and to make sure that we do everything we can to keep prices down."
It comes as travellers are unhappy as airfares continue to skyrocket after COVID-19 with some complaining they're costing two or three times what they did pre-pandemic.
Foran said a lot of their expenses like fuel and inflation are out of their hands, so reducing the costs of domestic flights might not happen anytime soon.
"We're doing our best to get that down as quickly as we can and we've got the first of a new jet arriving today into the country, we've got another one coming in before Christmas, another one in February, March," he said.
"That extra capacity will help bring prices down. But the other aspect that we're dealing with is, what happens in terms of the price of fuel, what happens with inflation generally, and what sort of demand that we're going to see out there. At the moment, demand has really exceeded our expectations. People are very keen to get out there and travel."
Air New Zealand launched its direct service to Bali on Monday and Foran said demand for that route in the first 24 hours since it has been on sale has been high.
"We launched Bali yesterday and we sold about 3600 seats in the first 24 hours. That compares to about 800 for New York over the same time frame," he said.
"So there's quite strong demand. We're going to get the extra capacity out there, but it's hard for me to give you a date when prices come down. But we have very conscious of it."
But Foran couldn't rule out domestic airfares increasing again before the end of the year.
"I don't want to predict what's going to happen with the prices of some of those import costs, it's very difficult to determine when fuel is effectively driven by geopolitical issues overseas. Our intention would be not to, but I can't promise that," Foran said.
Air New Zealand announced last month that they're back into profits but Foran said they're not back into "ridiculous profits" but said it's in line with costs.
"We're certainly not back into ridiculous profits. We are back into profit. I can assure you that domestically, with the price increases on average 20 percent, and I know that at a given point in time someone can find a flight that's three times more expensive, but I can assure you when we do the maths and we have a look at what we call the weighted average distribution of tickets, they're up about 20 percent," Foran explained.
"That actually is about in line with what we're seeing in terms of costs. So that's a combination of fuel and also inflation that we get right with all the other services that we have to buy."
Watch the full interview with Greg Foran above.
