Air New Zealand will increase domestic and international fares from mid-July, the airline said today, blaming its fourth fare hike since March on rising fuel prices.

The national carrier said domestic fares and those to and from Australia will rise 3% from July 17, while international fares to North America, Asia and the United Kingdom will increase by an average 5%.

The airline could not continue to absorb the rising cost of jet fuel, which is now priced above $US170 ($176.80) a barrel, said Deputy Chief Executive Norm Thompson.

The fare increases would only partly recover the rising cost, he said in a statement.

The carrier raised fares on many routes by an average 4% last month. That followed two hikes of about 3% in domestic fares earlier in the year.

Air New Zealand had signalled earlier that further hikes in ticket prices were likely because of high oil prices.

In April the airline lowered its fiscal year profit guidance and said it no longer expected to better its 2007 result because of the impact of fuel prices.

It set its new forecast for normalised earnings before tax and unusual items at between $US156 million ($162.25 million) to $US171 million ($177.85 million). It had previously expected to match the $US205 million ($213.2 million) posted in 2007.

AP