Border tax could hit airport growth: S&P

Standard & Poor's says growth at Auckland Airport could be hit by the new passenger tax. Photo: Greg Bowker.

Standard & Poor's says growth at Auckland Airport could be hit by the new passenger tax but it hasn't changed its ratings of the company.

A $22 additional charge is due to come in from next January for passengers on round trips to and from New Zealand as a result of plans announced in the Budget.

"Although Auckland International Airport (AIAL) is more exposed to international traffic compared to its New Zealand peers - Wellington International Airport and Christchurch International - we believe the additional charge would represent only a small increase on a ticket price."

Given domestic traffic is the key earnings for Wellington and Christchurch airports S&P said they viewed the announcement as immaterial for the ratings on the two companies as well.

The agency said its view on the impact for AIAL was also driven by the fact that the company currently operated with an adequate buffer in its rating.

It expected its funds from operations to debt being about 15 per cent during the current financial year and the next one, about 300 basis points (bps) higher than the point at which the current rating would come under pressure.

"Even in the extreme scenario of international traffic growth rate reducing by 50 per cent due to the higher charges, we estimate that the impact would be limited to about 100 bps," said S&P.

"In reality, we believe that the impact on passenger numbers will be ultimately limited, but it could see a growth rate on the international traffic marginally below our current expectation of about 3 per cent to 5 per cent."

Auckland Airport shares were up 1c to $4.78 in early trading.