Editorial: Airlines right to call out monopolists over Airways charges

Airways has announced it will raise charges by 21 per cent over the next three years for air navigation services. File photo / Doug Sherring

Editorial

EDITORIAL:

Airlines have little or no choice about airports they operate at and the air traffic control agency they use.

But passengers have a wealth of options when booking flights.

Rapid growth in demand for flights led to 11 new carriers operating at Auckland Airport alone in a two-year period and, while this growth rate has levelled off, competition between airlines is as hot as ever.

In real terms, air fare increases have been running well below the Consumer Price Index for the past decade and continue to run at record lows.

This is why airlines are so wary of the fixed charges being heaped on them. While their revenue fluctuates, that of the monopoly suppliers of services such as Airways and the airports are far more steady.

Right now, the decision by state-owned Airways to put up its prices by 21.4 per cent cumulatively during the next three years has attracted international attention. The umbrella body for 290 carriers around the world, the International Air Transport Association, condemned the move to put up charges from this month.

The fees are going up when annual global airline profits are being squeezed from a very healthy US$35 billion ($52b) forecast six months ago to last month's projected US$28b.

While still robust relative to historically poor returns for the airline industry, it illustrates how quickly fortunes change for carriers which are vulnerable to fuel price increases and demand weakness.

Airways says prices are rising to cover investment in new equipment and systems. Safety is non-negotiable but stakeholders have every right to question how their money is being spent.

The association has told Airways it needs to conduct ''forensic analysis'' of its costs.
And this past weekend, the transtasman airline lobby group Airlines for Australia and New Zealand (A4ANZ) weighed in. A4ANZ chief executive Alison Roberts rightly says airports and Airways don't have competitors breathing down their necks as airlines do.

Her group is pushing for tighter control of monopoly operators to encourage genuine consultation with stakeholders. The group also wants service quality measures imposed on monopoly operators in the aviation sector.

Right now airports and Airways can talk for as long as they choose but then price as they see fit.

Alison Roberts of Airlines for Australia and New Zealand. Photo / Supplied

Negotiations, and, importantly, public and political pressure can work though. Earlier this year, Auckland Airport, which enjoys profit margins of 74 per cent, reduced charging to airlines by $33 million during the current pricing period.

Airways says prices are rising to cover investment in new equipment and systems. Safety is non-negotiable but stakeholders have every right to question how their money is being spent. Questions remain about staffing levels at Airways.

There have been air traffic controller shortages in some areas this past summer, which, according to pilots, has led to flight delays. Likewise, airports put up prices in advance to ensure runways and terminals are built to keep up with demand.

But, as is obvious given the state of Auckland Airport's domestic terminal, they don't always get it right.

Attention from international and regional aviation lobby groups may not be welcomed by those on the receiving end but will be encouraged by flyers enjoying lower fares.