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Air NZ joins govt's panel for air travel

NZ Newswire logoNZ Newswire 22/02/2017 Paul McBeth

Air New Zealand has joined the panel of carriers providing air services in the government's cross-agency contract designed to get the best deal for the taxpayer.

Subject to government sign-off, the national carrier will be another addition to the panel, which expanded the number of airlines government departments can fly with. The new agreement is for a four-year term, with potential for three two-year rights of renewal.

Air New Zealand and other unnamed airlines were still in negotiations when the Ministry of Business, Innovation and Employment announced a number of carriers allowed to ferry public servants earlier this month. The new deal is set to come into effect next month.

"We're delighted to be reappointed to the panel of carriers to support the government's flight requirements," Air New Zealand chief revenue officer Cam Wallace said in a statement. "As New Zealand's national carrier we have a long-standing relationship with the government and a track record of delivering value to public agencies."

Former Economic Development Minister Steven Joyce asked for the contract to be retendered last year as heightened competition prompted a review of the benefits from all-of-government procurement, which had delivered $37 million in savings for the Crown.

The contract is currently shared by national carrier Air NZ, Emirates, Lufthansa, Qantas and Singapore Airline. Air NZ had been the sole supplier for domestic routes but has since faced increased competition from an expanded Jetstar offering and the introduction of several smaller regional airlines.

Auckland-based Air New Zealand reports on Thursday and is forecast to post a 45 per cent decline in first-half earnings to $186.5 million on a 2.6 per cent decline in revenue to $2.63 billion, according to Forsyth Barr analyst Andy Bowley.

The shares were unchanged at $2.155, and have dropped 6.1 per cent over the past 12 months.

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