Airways seeks rise in charges to pay for gear

The new system will better pinpoint planes in the Queenstown Basin. Photo / Geoffrey Thomas

Airways New Zealand wants to put up charges for airlines using Queenstown Airport by 34 per cent to pay for new equipment there and has signalled price rises for all core services from next year.

One airline is seeking answers on how the new charges were calculated and warns creeping costs could feed into higher airfares and adversely affect services.

Airways, a state-owned enterprise responsible for managing all dom-estic and international air traffic operating within New Zealand, plans to introduce the new charges next February.

The charges will push up fixed costs of landing jets at the airport by just under $10 plus a charge based on weight over 30 tonnes.

A new $2.6 million multi-lateration system to more accurately pinpoint planes in the Queenstown basin has been installed.

Airways wants airlines' feedback on the proposed new charges.

Jetstar spokesman Simon Westaway said his airline was formulating a formal response but it did want to know what methodology was used in calculating the price rise.

Airport and aviation service charges accounted for 25 per cent of Jetstar's costs and its passengers had told the airline they did not want to see them rise unnecessarily.

The new multi-lateration system would not make any operational differences to Jetstar although it could ease congestion at peak times.

"We really need to ensure all participants in aviation know that rising costs well above the rate of inflation can have an adverse effect on our services," Westaway said.

Air New Zealand says it is "supportive of the safety enhancement", while Pacific Blue says it recognises the importance of safety initiatives at airports but is wary of adding extra cost to its business.

"We will be reviewing the proposed increase and are yet to decide whether we will make a formal submission," a spokesman said.

Airways reported an after-tax operating profit of $4.5 million in the year to June 30, sharply down on $10.5 million the previous year. This was in spite of a 4 per cent increase in fees for airlines and cutting business costs by $1.6 million.

It suffered its first domestic revenue fall since 1996 and has warned the outlook for 2009/10 is uncertain.

Airways will start consulting airlines over a general price rise for its core services in January.

Commercial manager Bert Prvanov said across-the-board charges had been held for 11 years until last year.

"We have to recover the cost. After 11 years costs have caught up with us but the growth in industry has been keeping up the pace."

The Queenstown charges had been slated to rise 40 per cent when the new system had been discussed with airlines two years ago.

The airline industry body, the Board of Airline Representatives, says charges are usually passed on.

"Because the airlines are competing by and large any increase in charge is passed on to passengers because airlines don't have the capacity to cope with it," said executive director John Beckett.

When Airways had first mooted the Queenstown system it was thought the charges could have been higher.

"While an increase of that magnitude is never welcome at any time this is not a surprise and is accepted."

Beckett said that unlike dealings with some other suppliers to airlines, the relationship with Airways was a good one. "They show how an organisation can be in a monopoly position but not abuse it because their information disclosure is good and they listen to airlines."

Movements of larger aircraft at Queenstown Airport grew by 56 per cent to more than 8000 a year between 1995 and last year.

PAYING THE BILL

* Airways wants to bill airlines to pay for a $2.6 million system in Queenstown.
* The SOE has started increasing charges after 11 years of holding them and being hit by slower revenue growth.