Air New Zealand is upbeat about the next six months if lower fuel prices remain stable despite posting a 79 per cent slump in profits....

...Competitive pressures meant most of the gains were already priced in.

Also, most of the eight airlines on the Tasman route were at best breaking even, and several were losing money, Mr Fyfe said.

"So the scope for competition to drive prices lower in those markets, certainly on a sustained basis, looks very limited."

Long-haul fares could reduce a little further, although there had been some recent cuts.

Tasman and Pacific Island passengers were down 7.3 per cent, but yields on each seat improved 6.4 per cent.

The New Zealand domestic market, where Qantas will be replaced with budget airline Jetstar in June, held up better with a 2.9 per cent fall in passenger numbers and yields up fractionally.

Long-haul passenger numbers were down 5.5 per cent.

Demand was softer out of Asia than out of the United States, Britain and Australia.

Air New Zealand carried 6.3 million people, down 4.3 per cent which reduced revenue by $78m to $2.4 billion.

Most was recovered through higher yields.

Costs of $2.1b were up 11.5 per cent, partly due to a steep rise in maintenance expenses, including the cost of parts....