Airports, air fees hit NZ flyers hard - IATA

Tony Tyler, head of the world's airline organistion IATA, says that NZ air passengers are suffering due to costs imposed by our airports and air traffic control operator Airways.

The head of the organisation representing airlines around the world says passengers are suffering because of costs imposed by New Zealand airports and the air traffic control operator.

Tony Tyler, the director general and chief executive of the International Air Transport Association said regulation here was too light-handed.

"Intense competition keeps airline fares in check," he told a business audience in Auckland.

"But a much stronger hand of government is needed for infrastructure providers than exists today. In fact, the Airport Authorities Act basically says that airports can price as they see fit. Certainly this should evolve to a structure that forces airports and their airline customers to reach fair commercial agreements."

While the Commerce Commission said Auckland Airport was making a "reasonable return" Tyler said that over the next five years Wellington airport will collect up to $69 million more than it needs to in order to meet what the commission believed was an appropriate level of return.

"New Zealand has taken a very light-handed approach to economic regulation and the results have not been satisfactory. Frankly, I think that the travelling public is suffering as a result."

Airways New Zealand was also a concern to IATA.

Airways was a past winner of the association's Eagle Award in recognition of the enormous reform efforts that it went through a decade or so ago as it corporatised.

This "well-deserved" good reputation was built on effective collaboration with its customers - the airlines.

"Unfortunately, that reputation is at risk. From yesterday a 10.6 per cent fee hike took effect. Further planned increases will see a total fee increase of 15.7 per cent by 2015."

Tyler said it was a big problem for airlines and a departure from the partnership built-up since corporatisation.

"It certainly does not reflect the industry's focus on managing costs and improving efficiency. I should be clear that airlines are willing to pay for efficiencies. But such decisions must be the result of a robust discussion and an agreement - rather than a heavy handed decision by an infrastructure provider enjoying a monopoly position."

New Zealand Airports Association chief executive Kevin Ward said airline charges at New Zealand airports compare favourably with those overseas.

"Ultimately they are only a small fraction of the end ticket price for travellers. Airline charges pay for the services that airlines receive as well as for part of the significant investment in infrastructure that airports need to maintain essential links."

He said there was a robust regime for ensuring fair prices for airlines and, ultimately, travellers.

"The regime requires airports to consult but gives them the right to set charges to protect them against undue pressure from airlines which dominate the aviation industry."

Airport charges and how they are set by the major airports are independently reviewed by the Commerce Commission to ensure they were fair and the process was in its infancy.