Board of Airline Representatives says clock ticking for Auckland Airport on pricing response

Auckland Airport redeveloping its international terminal. Photo / Jason Oxenham

Airlines are turning the heat up on Auckland Airport, saying it should reduce its prices rather than ''exploit its monopoly position'' and ignore a Commerce Commission finding that the company could be overcharging by up to $37 million.

As commerce minister Kris Faafoi grows increasingly impatient with a lack of a response from the airport, the Board of Airline Representatives New Zealand says the company should reveal its intentions around its pricing regime before its next shareholder dividend is fixed in mid-March.

Barnz executive director Justin Tighe-Umbers said Auckland Airport has an important choice to make - ''do the right thing by its customers and reduce its prices, or continue to exploit its monopoly position and enrich shareholders'.'

His group has a meeting scheduled with the company for later this week.

He said that since April 2017 Auckland Airport has paid out $505.5m in dividends, providing a ''tidy return'' on investment for shareholders.

"Obviously with the airport company's shares hitting as high as $7.70 on January 28 it will not be wanting to rattle any shareholders," Tighe-Umbers said.

Although concerns about the outlook for tourism have seen shares retreat to $7.27, they are still 10 per cent higher than at the same time last year.

"But in the interests of transparency, the airport company should come out and respond to Kris Faafoi about the Commerce Commission's finding that it is overcharging by many millions of dollars.''

The commission estimated the airport would earn an additional post-tax return of $37m on the majority of its regulated services compared to the commission's benchmark return.

Its report came out on October 31 and then the airport said it would it would carefully review how evidence was assessed and findings shaped.

The airport said tody it would be commenting on the the commission's findings later this month.

''This is a very important area for us. The prices we charge airlines are a central part of providing for the very significant new infrastructure investment we are making at the airport over the course of a major 30-year masterplan to meet future needs,'' said Adrienne Darling, head of economic regulation and pricing.

She said it was focussed on passenger value and on continuing to improve service to travellers and support for the growth of New Zealand's trade and tourism.

Average overall prices to airlines had been falling in inflation-adjusted terms over recent years.

Darling said domestic prices would increase by 0.8 per cent per year and international prices will fall by 1.7 per cent over the five-year pricing period.

Tighe-Umbers said three months, even with the holiday season in the interim, was enough time for the airport to respond.

''As the clock keeps ticking, airlines and their passengers continue to be over-charged," he said.

He conceded the commission had no power to compel the airport to lower its charges as in the current regime it could charge as it saw fit.

Barnz has 29 member airlines and submitted to the commission that the airlines flying into New Zealand would be overcharged by more than $50m before tax.

Already airlines have been paying out at the higher rates challenged by the commission since they started in 2017 prior to the review.

"We want the excess in those payments back," Tighe-Umbers said.

Members could spread the reduction ''we are expecting'' to keep fares lower in the face of a number of other increasing costs such as jet fuel and biosecurity.

Tourism was vital to the economy. We have to do everything we can to remain cost competitive as a destination."

Faafoi last week said he too was waiting for a response from the company but expected a reduction in charges.

The New Zealand Airports Association (NZ Airports) says airport charges only make up a very small portion of airfares. Passengers paid $6 to $12 for each domestic trip through an airport. Charges per international passenger range from $13 to $26.

''These modest charges cover all infrastructure that you see at each airport, including runways, taxiways, terminals, airbridges and, for international passengers, the space required for border processes,'' said chief executive Kevin Ward.