Source: Radio New Zealand
Duane Emeny, chief operating officer of Air Chathams. Sharon Brettkelly
Airlines may have to cut the number of flights as they grapple with the soaring price of aviation fuel, according to the boss of a New Zealand airline.
The chief executive of Air Chathams says the rising cost of oil is costing the small airline some $140,000 extra a month in fuel.
The conflict in Iran has closed the Strait of Hormuz, a vital shipping route carrying about 20 percent of the world’s oil and gas.
It’s pushed the global oil prices higher. The benchmark Brent Crude rose 18 percent or by US$18 to US$110 a barrel shortly after trading resumed on Monday at 11am NZT.
Air Chathams chief executive Duane Emeny told Checkpoint that prices were certainly on their way up.
Emeny said fuel was the company’s third most expensive cost, behind people and maintenance, and it’s causing significant cost increases for the airline.
“Every time the fuel costs go up by 10 cents, for a small airline like Air Chathams, that’s about $300k on to the bottom line for us. As you can imagine, with an increase of about $60 a barrel to what we are seeing at the moment, which is around the $115 mark, you are looking at annual costs of about 1.65 million increase, or $140k a month,” he said.
“So, it’s really, really significant, especially for a small airline.”
Emeny said the airline may have to cut the number of flights should the price of jet fuel remain so high.
“If you can’t afford to put aeroplanes in the air, then you’ve got to look at that and say ‘do I cut back my schedule, do I provide less connectivity because of this cost and then wait until it comes right and eases?’.”
“… All airlines will be looking at this, the big ones and the little ones,” Emeny said.
He’d like the government to look at ways to soften the blow on airlines.
“It’s an uncontrollable. We just have to grin and bear it,” Emeny said.
“I would just say, if there is any opportunity for the government to look at some of the mechanisms they do control – [Civil Aviation Authority] CAA levies, cost of airways, those sort of things – maybe there’s some short-term measures we can look at to support airlines.”
He said pausing those levies would be a welcome relief, saving the airline around $200,000 a month.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
