Carrie Hurihanganu on a visit to the integrated terminal build site with PM Christopher Luxon on June 9. Photo / Dean Purcell
Auckland Airport’s chief executive says she’s hopeful international passenger numbers will rise despite some big challenges.
The airport is engaged in massive infrastructure projects and has faced scrutiny from regulators, while contending with impacts of a global aircraft shortage.
In its annual result, the airport today reported a “solid” net profit after tax up 12% to $310.4 million.
Total passenger movements were up, although domestic passenger movements were down.
International airline seat capacity was yet to surpass pre-pandemic rates, sitting at 92% of 2019 levels.
The airport’s chief executive Carrie Hurihanganui told the Herald that despite international capacity challenges, passenger numbers and load factors were up.
“And that’s an indication it’s not necessarily a demand problem.”
Hurihanganui said the airport expected international passenger numbers to rise from 10.3m in the last financial year to about 10.6m in the next.
“We are getting positive signs on international airlines that New Zealand is still an attractive destination.”
Qantas, China Eastern and Cathay Pacific had started new services or bolstered existing services.
“There is positivity but with the global fleet challenges that continue to hang over global aviation, New Zealand is certainly not exempt from that.”
On domestic travel, Hurihanganui said the key constraint was capacity but positive signs were emerging.
“If you look in the last 12 months, you saw Jetstar growing at about 14%.”
Hurihanganui said Air New Zealand was working through its well-documented engine troubles.
The airport is spending billions on new infrastructure.
The international airfield expansion was expected to be operational early in this calendar year’s fourth quarter, so potentially as soon as next month.
The airport has said an infrastructure highlight for the financial year was signing an $800m contract with Hawkins last September for construction of the new domestic jet terminal.
The airport said that development was well under way and employing 1500 people across the terminal integration programme.
“In terms of our prudent cost management, the operating costs were up 8% last year and that was mainly driven by the growth in activity,” Hurihanganui said.
Some airlines have criticised the amount of money Auckland Airport is spending on new projects, saying they have to pick up part of the tab, and in turn pass costs on to flyers.
“You had Manawa Bay, standing up the transport hub opened in November last year, so you’ve got operating costs that go alongside that commercial development,” Hurihanganui said.
“Some cost growth goes hand-in-hand with that.”
Aeronautical activities at Auckland Airport are regulated, but the company’s retail and car parking activities are not.
Some refer to that as a dual till model.
Jarden analysts in May said any future regulatory review would likely find limited evidence that Auckland Airport had wielded excessive market power.
The airport today said a Commerce Commission price-setting report confirmed the infrastructure investment programme was reasonable.
“In regards to airlines and the build itself, you can go right back to March this year when the ComCom came up with a pricing report.
“They said it benchmarked well internationally, it was reasonable, we consulted well, it had rigour applied to it,” Hurihanganui said.
“When you look at things like landing charges around New Zealand, Australia, even up into Asia, our landing fees are very competitive.
“It’s a challenging one. New Zealand has an infrastructure debt problem and when we invest in infrastructure, whether that’s Auckland Airport or other parts of New Zealand, that is an investment and it is a user-pays basis,” she said.
“I understand every business wants to manage their costs.”
But it was crucial for New Zealand to have a “future-fit and resilient” airport, she said.
Hurihanganui said the current legislative framework gave the Commerce Commission the ability to monitor information disclosure.
“So if there is a question around that forward look of major capital investments, they’ve got the tools to do that and obviously we’re supportive of that. That’s the model that we worked on for years and we think it’s fit for purpose. It’s got that good balance.”
She said regulation already noted fundamentally different drivers between airports, with long-term infrastructure plans, and airlines which tended to have shorter-term goals.
“The regulation is there to help balance those things to get the right outcome for the end user, which is the consumer, the travelling public.”