Airlines fume at airport's 78 per cent rise

By CHRIS DANIELS

Wellington Airport has incurred the wrath of airlines by raising its charges 78 per cent, bringing to an end 19 months of fractious negotiations.

The airport company earns $17.5 million a year from aeronautical fees, but assuming the same number and types of planes land this year, the increase will lift that income to $31.5 million.

The new charges will particularly affect Air New Zealand, which is believed to account for more than 80 per cent of the airport's traffic.

If airlines pass the increase on to passengers, it will add $4 to the average price of a one-way trip.

Wellington International Airport Ltd (WIAL) is 66 per cent owned by listed infrastructure investment company Infratil, with the remaining 34 per cent owned by the Wellington City Council.

Board of Airline Representatives executive director Stewart Milne said the increase was evidence of an airport company "out of control".

It had set its fees in complete disregard for the recent Commerce Commission report into airfield pricing.

The Government asked the commission to investigate whether airports should be put under official price control.

Last July the investigation cleared Wellington of charging excessive prices, but noted that "if WIAL imposes a significant increase in charges as a result of its current consultation with the airlines, the commission would likely be satisfied that it would be necessary or desirable for the airfield activities supplied by WIAL to be controlled in the interests of persons acquiring those goods or services".

Commerce Minister Lianne Dalziel is considering the report.

"We will be going to the Minister of Commerce and saying, 'Well, they've done it'," said Milne.

"We believe the credibility of the whole system is being put at risk when you have a Commerce Commission and a report, then an airport just thumbing its nose at what it has come up with."

Milne said the airlines agreed there was a case for some increase. They had offered about 20 per cent, but would not accept a jump of this magnitude.

Wellington Airport had revalued its assets as highly as possible, then said it required a 10 per cent return on them.

"They are just wanting to cream it," said Milne.

Airport chief executive John Sheridan said a 10 per cent rate of return was commensurate with the nature of the airport company's business and within the range suggested by the commission.

He said it was the first full review of charges for five years. The main reason for the increase was the $116 million development of the new terminal, an investment the company had not received any return from.