Taxes Push Air NZ to Cut Flights

December 14, 2011 New Zealand Taxation

Flight Choreography
The national airline carrier Air New Zealand is looking at cutting flights to London, following 6 months of losses and due to the upcoming increases to the tax rate for passengers departing the UK.

Air New Zealand is considering cut backs to its international long haul operations, with the company’s flagship flight to London already facing the prospect of being axed. The company says that the upcoming UK air passenger duty is also contributing to the potential decision.

Under recently instated rules, from April 2012 economy class passengers flying from the UK to New Zealand will face a departure levy of GBP 92, compared to the GBP 85 they are facing now. Commenting on the effect of the tax, Brent Thomas, director of House of Travel, said that a family flying from Europe could save over NZD 700 in taxes by flying back to New Zealand from a different country.

Air New Zealand reported a NZD 1 million per week loss on its long haul international operations in the first six month of the current fiscal year. The company has so far chosen not to release estimates of the impact that the new passenger duty will have on the company’s operations, but a Air NZ spokeswoman said that the levy was “naturally of concern”.

The increases to the rate of the UK Air Passenger Duty tax is also facing contention from New Zealand based tourism operators with the Tourism Industry Association of New Zealand calling the levy discriminatory and arbitrary.

Photo by Artiii