KEY POINTS:
Give other improvements a chance to work before committing to a terminal upgrade, say airlines as they try to pressure Auckland International Airport into delaying $180 million plans.
As part of its eternal battle with airports over who should pay for upgrades, Air New Zealand and airline lobby group BARNZ say the planned upgrade is too flash and there's no need to bring it forward because of the Rugby World Cup in 2011.
Air New Zealand deputy chief executive Norm Thompson last week told the Herald on Sunday the upgrade, which is known as "3B", is a "gold-plated" and "costly" solution to a problem that does not exist.
Airlines are still smarting from the latest round of landing charge increases, which are rising by 2.5 per cent a year for the next five years. As is now customary when airport charges rise, Air New Zealand is challenging the price hike in court.
The airport's $25 departure charge is also being increased, by 50 cents a year for the next three years. It will, however, now be charged to both incoming and outgoing airport users, and be included in ticket prices rather than charged separately.
Whether the development plan leads to an increase in air ticket sales won't be known until the work is completed - which will be in late 2010 if the airport gets its way, later if the airlines win the latest stoush.
Airport chief executive Don Huse says the Rugby World Cup in 2011 is "incidental" to bringing forward the development plan by 18 months, since improvements are needed in the terminal due to natural passenger growth, and development timetables must be flexible.
There is already congestion at peak times, and especially when aircraft are not running to schedule. The arrival concourse, where people gather to meet and greet arriving passengers, is becoming "very crowded" despite its recent expansion.
Huse says the airport is expecting growth of 4 to 5 per cent, every year, for the next four to five years.
Roads outside the terminal are also getting congested during the busy summer months, as are the baggage carousels. "There are times now when all five are being used, so again, you protract out another four or five years at 4 or 5 per cent growth, you've got real problems there as well," he says.
"The plan was always able to be brought forward if growth accelerated, or put on hold if the numbers did not grow as expected."
While the World Cup is not the primary reason for bringing the work forward, it will mean that arriving rugby fans will not have to walk through a building site.
How exactly the work will be paid for - namely how much the airlines will pay directly and how much passengers will pay themselves - is now being discussed. But to get it ready for the summer season of 2010/11, a decision must be made now.
Whether air fares increase as a result of a hike in airport charges is up to the airlines, which set their prices based on many factors including the competitive state of the market.
It's not as clear as all that though, says Board of Airline Representatives executive director Stewart Milne.
The airport company says it needs to be done now, but "you can always go ahead and build things before they're needed, and if you're a monopoly and you've got the powers to impose charges on other people for facilities whether or not they're needed, then you go ahead".
Work on moving customs and immigration processing upstairs in the terminal is due to be completed next year, says Milne. Why not wait to see how successful this is before rushing to commit to the next lot of expensive development work?
"On all best estimates, that will increase the capacity for handling passengers by at least 500 an hour," he says. "Currently you've got a sustainable number of arriving passengers of about 1500 an hour, and at peaks - for a short period - border agencies can do 2000 an hour."
This should increase to a sustainable 2000 and a peak 2500 by next year - likely to be more than enough to handle growth until 2012-13.
On top of this, a lot of work is being done by the border agencies to better process passengers. A ministerial group headed by Jim Anderton is going through ways of improving passenger processing, while still making sure they do the checks properly.
This group has been "working diligently" and has reported back a belief it can make significant improvements in processing arriving passengers, says Milne. This could be achieved by combining the "primary line"of initial immigration screening with other checks, such as MaF's.
"They may be able to handle more than 2500 in peaks. Why go ahead and spend $180-$190 million if you don't know it? What's going to come out of that process?"
Even if these don't work, the airport could co-ordinate aircraft arrival times to ensure they do not all arrive at the same time to smooth out the peak times. "It's not simple, but they are used to being told," says Milne.
"You've got the control of saying when aircraft can arrive. If they suddenly want to bring in an A380 [the new Airbus jet which will carry up to 500 passengers] at a time when expecting other aircraft, tell them to come half an hour later.
"For all of those reasons, we think that it is definitely premature to be going ahead and we should wait and see. There will be plenty of time to build it. We think it will be after 2011 when they need to start."
Milne says any concerns about passengers arriving at a building site during the Rugby World Cup are exaggerated, since most airports around the world have building work going on - and Auckland Airport has already shown it is good at minimising the impact of construction.
Even then, the risk of offending sports fans' aesthetic sensibilities should not be overestimated. "I wasn't actually aware that rugby followers were all that sensitive."
Extras you pay
The total cost of a trip across the ditch, using a Qantas standard economy class fare, non-refundable return ticket to Sydney, consists of the following elements:
* Airfare: $444
* Auckland International Airport departure fee: $25
* New Zealand passenger security charge: $13.56
* Fuel surcharge: $140
* Australian passenger service charge: $55.60
* Australian passenger movement charge: $46.30
Total: $724.46The separate $25 departure charge, all of which goes to the airport company, is being dropped from July 1 next yearwhen it will be included in ticket prices.
Airport money
Of the $321.9 million in revenues Auckland International Airport received in the 2006 financial year, more than half - $169.4m - came from what it described as "non-aeronautical' activities. This covered all the money earned from its car-parks, the retail stores in the terminals and property rentals.
The other $152m in "aeronautical" revenue came from charges levied on the airlines and the $25 per passenger departure fee.
