New Zealand recorded 358,900 international visitor arrivals in March 2026, up 15 percent or 47,100 on March 2025, according to Stats NZ. Overseas visitor arrivals reached 3.63 million for the year ended March 2026, an increase of 305,000 from the previous year. Australia supplied the largest gain with 24,100 extra arrivals to reach 138,400. China added 4,200 to 24,600. The United States posted a March record of 53,400, up 4,100. The United Kingdom rose 3,500 to 22,200.
Auckland International Airport chief executive Carrie Hurihanganui told a pre-event audience for TRENZ 2026 that international passenger demand was largely holding up despite the conflict. Airlines have trimmed capacity rather than slashed it. The industry remains in wait-and-see mode ahead of the 19–21 May trade show in Auckland.
The drivers
Jet fuel prices have traded between US$160 and US$230 per barrel in recent weeks compared with US$85 to US$90 prior to the conflict that began on 28 February 2026, according to Air New Zealand's NZX market update. Fuel typically accounts for up to a quarter of operating costs for New Zealand carriers. Direct flights from New Zealand to Qatar ceased from 1 March. Fewer direct flights operate to the United Arab Emirates. March saw only 1,400 arrivals on direct UAE flights and none from Qatar. Arrivals from the United Kingdom and Germany via those routes fell sharply.
Air New Zealand has executed three targeted capacity consolidations since the conflict began. These moves reduce overall group capacity by 3 to 5 percent, according to the airline's NZX filing. The carrier raised one-way economy fares by NZ$10 on domestic routes, NZ$20 on short-haul international routes and NZ$90 on long-haul routes. It now forecasts a pre-tax loss of NZ$340 million to NZ$390 million for the full 2026 financial year. Second-half fuel costs are expected to reach approximately NZ$980 million compared with NZ$740 million assumed at the interim result. The airline is around 85 percent hedged against its second-half Brent crude exposure.
Qantas Group forecasts a second-half 2026 fuel bill of A$3.1 billion to A$3.3 billion, up from a prior A$2.2 billion forecast, according to its April market update. The group hedged 90 percent of crude exposure but remains exposed to jet refining margins that surged from US$20 to US$120 per barrel. Qantas and Jetstar extended 5 percent domestic capacity cuts through September 2026 and trimmed some New Zealand trans-Tasman flights. Virgin Australia plans a more modest 1 percent domestic trim for the June quarter and faces extra fuel costs of A$30 million to A$40 million. Some Doha services remain suspended until mid-2026.
The trade-offs
Airlines pass higher costs to passengers through fare increases and modest capacity reductions. Demand in New Zealand's isolated market shows elasticity so far. Stats NZ data confirms arrivals continue the post-pandemic recovery. Yet higher fares and longer routings around Middle East airspace raise questions about sustainability for long-haul markets.
The Reserve Bank of New Zealand faces two-sided risks. Imported fuel inflation could lift consumer prices while slower tourism growth could weigh on economic activity. The central bank is expected to stay on hold at its May 2026 Monetary Policy Statement. Treasury released three oil-shock scenarios in late April. The best case assumes oil near US$110 per barrel and projects inflation at 3.9 percent, GDP growth at 2.0 percent and unemployment at 5.3 percent. The middle scenario lifts inflation to 5.2 percent. The worst case assumes US$180 per barrel and pushes inflation to 7.4 percent, growth to 0.8 percent and unemployment to 6.6 percent by mid-2027.
Finance Minister Nicola Willis described the recovery as delayed but not derailed and called the worst case highly unlikely.
