One of the big gotcha moments when booking any international flight is the taxes and surcharges applied by countries and airlines. While it's now common for these to be built into ticket prices rather than being a separate add-on, seeing the breakdown of these taxes can still be surprising for many people.
For those people booking reward flights using airline frequent flyer points, paying taxes and surcharges with cash is still a requirement of most airlines.
Flights between New Zealand and Australia are some of the most heavily taxed in the world - prior to Covid 19, the tax component of a return flight was typically around NZ$185 - NZ$200 depending on the route. With discounted sale fares on Trans Tasman routes routinely popping up for under NZ$300 for return flights, it meant airlines were often collecting no more than around $90 in revenue for themselves for return flights - a figure which would barely even cover fuel costs for an individual customer.
When Singapore Airlines launched their Wellington-Canberra-Singapore route, taxes for the sector between Wellington and Canberra were NZ$250, making it hard to price flights competitively with other Australian destinations.
As a comparison the current taxes and surcharges for return flights from New Zealand to Japan is around NZ$120, for return flights to Singapore it's around NZ$116, for return flights to Fiji it's around NZ$155, for return flights to Samoa it's around NZ$117, and for return flights to the USA it's around NZ$165
The high taxes and comparatively low ticket prices on the Trans Tasman routes are one of the reasons that financially it has been a blood bath for many airlines. Dumping seats at low prices has simply meant losing money, something that simply isn't sustainable in the long term.
In our new post Covid-19 world we've now seen further tax increases on Trans Tasman routes, with the tax and surcharges component increasing by around 25%. Average tax and surcharges are now around NZ$250 - NZ$265 for a return Trans Tasman flight depending on the route.
Comparing my very last booking from 2020 (Wellington to Sydney and return from Melbourne to Wellington) to a booking made now for the same routes we see an increase from NZ$192.53 to NZ$261.01 for the very same flights.
These taxes and surcharges go to different organisations - some are airport costs, and some are government charges. They cover the cost of security and the costs of processing passengers by customs and immigration.
As somebody who normally flew to Australia 6-8 times per year in the pre Covid-19 world, typically for weekends away, I see these changes having the potential to impact some travel between both countries.
Last week Qantas announced that every seat on every Qantas and Jetstar flight between New Zealand will be available for 18,000 Qantas Reward points as a promotion to launch the "Trans Tasman bubble" when flights resume. While that offer is amazing, I really do wonder how many people could then be put off travel when they realise they will then be stumping up with a cash component of NZ$295 for a return flight from Wellington to Sydney on top of their Qantas Rewards points.
Whether the steep increase dampens Trans Tasman travel is something only time will tell. What is clear is that it's going to result in airfare increases.
