Concerns raised over Auckland Airport redevelopment costs

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Auckland Airport says its domestic charges had are almost 60 percent lower than what’s charged at comparable airports.
Photo: 123RF

Auckland Airport has hit back at Air New Zealand’s call for a review of the airport’s redevelopment costs.

Air New Zealand said the airport’s regulated charges would make flying unaffordable for some passengers, expected to add about $46 to the price of a domestic ticket by 2032 – a five-fold increase from today’s rate of about $9 per passenger.

However, Auckland Airport said domestic charges had been rock-bottom for many years, and was about 40 to 60 percent lower than that charged at comparable airports.

The national carrier said it had asked Commerce Minister Andrew Bayly for an urgent enquiry into the regulated costs, with the support of number of industry groups, including International Air Transport Association (IATA), Qantas Group, Board of Airline Representatives (BARNZ) and Airlines for Australia and New Zealand (A4ANZ).

“Air New Zealand agrees the airport needs redevelopment, but not at a cost that means some Kiwis can’t afford to fly. This issue affects all passengers flying through Auckland Airport – especially those from the regions,” Air NZ chief executive Greg Foran said.

He said the regulation was not fit for purpose and should be reviewed to provide for a negotiation and mediation process, which did not exist under the current regulations.

However, Auckland Airport said the Commerce Commission was currently scrutinising what it charged airlines to use essential airport assets, with the process due to be completed in September this year.

“Today’s move to circumvent the review process is because Air New Zealand has strong commercial incentives to oppose airport investment, both to protect its profit margins and its dominant position in the domestic market,” Auckland Airport chief executive Carrie Hurihanganui said.

She said the regulations had been reviewed a couple of times.

“Yes costs are going up, but it is critical to have an airport Auckland needs,” Hurihanganui said.

“Investment creates additional capacity that enables airline competition, which is good for customers and the cost of airfares.”

BARNZ executive director Cath O’Brien said the only plan being scrutinised was Auckland Airport’s plan, but there were cheaper alternatives that ought to be considered as well.

She said it was time to look carefully at whether regulation of Auckland Airport was working.

“We urge the Commerce Commission to consider an Inquiry as the best next step in making sure this monopoly airport develops its airport sustainably,” O’Brien said.

The Commerce Minister said it was important for the commission to conclude its review of the airport plan before determining whether there was a case for a stronger regime.

In the meantime, Bayly said he would be meeting with Hurihanganui to discuss the rising costs, later this week.

“I am concerned by the increased charges Auckland Airport proposes to pass onto airlines and ultimately passengers in the latest price-setting event,” he said.

“I will express my concerns about the effect on the price of air tickets, and encourage the airport to constructively engage with airlines.”