The airline's profit is up 40 per cent as it benefits from increased tourist numbers.

Air New Zealand's record profit probably won't mean your next flight is cheaper, but the airline's boss still reckons it is a great time to be a traveller here.

That is because of new market launches, increasing competition bringing more options for travellers, and money being ploughed back into upgrading or buying new aircraft, lounges and technology, chief executive Christopher Luxon​ said.

And with the number of people signed up to the Airpoints loyalty programme jumping by nearly a fifth to 2.2 million last year, customers seem interested.

JOHN ANTHONY/FAIRFAX NZ Air NZ chief executive Christopher Luxon says strong competition is a good thing for the local traveller.

Air NZ said on Friday it had made a record after tax profit of $463m for the year ended June 30, the most in its 76-year history.

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This led to a $2500 bonus for a big portion of its staff, as well as a $260m dividend for the Government, which owns just over half of the company.

BUSINESS NEWS/Radio New Zealand Booming passenger numbers and cheaper fuel have powered Air New Zealand to a record annual profit. CEO Christopher Luxon says a 40 per cent fall in fuel costs certainly helped but did the attraction of New Zealand.

But while Luxon would not say the 42 per cent profit increase would result in airfares being slashed, he suggested the takeaway from the company's best ever result was that it was "a great time to be a traveller in New Zealand".

"You've got so much competition coming into the marketplace, you've got Air NZ growing very strongly with big international markets and big growth domestically," Luxon said.

Growth in tourism had been a big driver of the nation carrier's performance, as Air New Zealand and its partner airlines, including United Airlines, Cathay Pacific and Singapore Airlines, bring about 45 per cent of visitors to the country.

New, more efficient aircraft, like the Boeing 787-9, also increased fuel efficiency, which for a company which spends nearly $1billion a year on it, helped keep costs down as revenue rose.

To illustrate this point, Luxon said a flight to Los Angeles 35 years ago cost about $1000, but now you could travel for just under that.

But he also warned this year would not produce another record, as the level of competition soared.

The confidence remained, however, because of three to four years of taking profits and "ploughing them straight back in the company," Luxon said.

Air NZ launched services to Buenos Aires, Houston, and Ho Chi Minh city in the second half of last year, which had gone much better than expected.

Flights to the Philippines were announced and then put on ice, where they remained because of concerns about security and difficulty getting approval from the Philippines government.

Luxon said the airline still saw plenty of opportunity for new routes, but had nothing to announce just yet.

"There's still millions of consumers or potential visitors we've got to reach out to and build the proposition with.

"But every quarter we're looking at new markets or emerging or potential new markets, in Asia, the Americas and Australasia, and that's something that's ongoing."

The tourism boom was expected to continue, and Air NZ was adding more premium economy and business class seats to some aircraft in response to demand from higher value customers.

Regionally, Luxon said it had done well after adding seats to the domestic market, and despite competitor Jetstar cracking one million passengers in the first half this year.

Air NZ has spent $600m on new aircraft which added seats on regional routes, and lowered prices, he said.

An investigation into inappropriate images of staff was ongoing, although two of the three involved had left the company.

Luxon said it was a disappointing situation because it undermined the great work of more than 11,000 others at the company.

Otherwise, there would be a lot of new innovations unveiled this year, but again, nothing to talk about yet.

"The profit is a good news story for our customers because of the investment we just talked about, and it's good news for our staff because for 8200 unionised workers who don't get a bonus, we're giving them one."

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