Air NZ raises fares, keeps cash

By CHRIS DANIELS aviation writer

Air New Zealand is pocketing new charges it is imposing on travellers going through Wellington Airport, refusing to pass the money on to the airport's owners.

The airline has launched a legal challenge against the way Wellington Airport went about raising its landing charges, in the meantime refusing to pay its bill.

Air New Zealand said last week that it would raise its fares for passengers using Wellington by 5 per cent. Its cheapest "smart saver" fares would go up by 10 per cent.

Fares are also increasing for flights that do not even use Wellington Airport. For instance, a direct flight from Auckland to Nelson will incur the charge because there is an alternative route that flies Auckland-Wellington-Nelson.

Air NZ says that this is to "avoid fare complexity". The extra money will stay in the airline's bank accounts and not be passed on to the airport.

Its justification for levying the charge, but refusing to pay the airport, is that it is a prudent business decision to start collecting the fee as it is being invoiced by the airport.

If its challenge to the 78 per cent rise in airport landing fees is successful, passengers will not be refunded. Extra money collected will be used to help Wellington tourism.

Qantas is paying the new airport charges, and has not increased its fares to passengers.

Air NZ's refusal to pay the new charges is only the latest tactic in a nasty commercial battle between the airline, 82 per cent owned by the Government, and the airport, 66 per cent owned by listed investment company Infratil and 34 per cent by Wellington City Council. Airline spokeswoman Rosie Paul said it would be impossible to refund individual travellers their fees should the airline succeed in having the fees reduced.

When asked why the disputed money could not be paid to the airport while still challenging its validity, Paul said: "That's a decision we have made, that's sub judice, that's before the courts."

The court action she refers to involves each of the parties challenging the actions of the other.

The airport company has filed proceedings in the High Court to force Air New Zealand into paying up the disputed sum of $7,057,000.

This is the combination of Air New Zealand's short payment of its February charges and what the airport says is the airline's "breach of a contractual obligation to make a backdated payment in respect of charges for the period from July 2002 to January 2003".

Air New Zealand responded to the lawsuit by asking the High Court for a judicial review of the price rises.

It is saying that the airport failed to consult in good faith and that despite the 19 months of discussion, the increases were pre-determined.

The airline has also asked the Government to impose price control on the airport, saying it has abused its monopoly position.