He said the Commerce Commission is reviewing current charges and airlines will have the opportunity to submit an interim assessment, due out in May.
“The commission can also comment on the effectiveness of the type of regulation employed, and whether there is a case for moving to a stronger regime.”
He said he would closely monitor this process.
Last June, the airport said international charges will initially increase from $23.40 to $46.10 by 2027. Domestic jet charges are going up from $6.75 to $15.45 and regional fees up from $4.40 to $10.70 in the 2027 financial year.
Air New Zealand has calculated $9 per domestic passenger today to $46 per domestic passenger in 2032, a figure the airport says hasn’t been set.
Apart from a ceasefire during the early part of the pandemic, Air New Zealand and Auckland Airport have been at each other’s throats over pricing for years.
Prime Minister Christopher Luxon headed Air New Zealand for seven years until 2019 and in that role was periodically at war with Auckland Airport, winding up the bosses at Māngere by studying the commercial viability of using the Defence Force base at Whenuapai as a base for domestic flights.
Luxon was a delegator in business and makes much of applying the same style in Cabinet, but will be a very interested spectator in the current skirmish.
Adding another personal dimension to skirmish is the fact that Hurihanganui in her former working life ascended through the ranks of Air New Zealand over 22 years to be chief operating officer.
The Board of Airline Representatives (Barnz) speaks on behalf of nearly all carriers in this market and says Auckland Airport (AIAL) is the “monopoly of monopolies” handling 77 per cent of air services coming into the country.
“It is the ‘Transpower’ of airports, effectively controlling the load for air traffic for the rest of the country,” says Barnz executive director Cath O’Brien.
Auckland Airport has hit back, saying Air New Zealand has 86 per cent of the domestic market, the most concentrated domestic aviation market in the world and has hiked its fares here by 32 per cent on average, compared to pre-pandemic.
It says it needs to fund an essential multi-billion dollar upgrade. Airlines agree the airport needs to be upgraded but not at any cost and say they’re being hit by surges in charges.
“AIAL’s sharp swing from under-investment to a bow wave of excessive capital cost forced onto unwilling customers is a sign of regulatory failure,” said O’Brien.
Air New Zealand says the impasse shows the current “Information Disclosure” regime within the Commerce Act is failing consumers, but there is a solution.
“The Commerce Act has pre-existing alternative options to keep regulated airports under control. These include steps that require airports to negotiate with their customers on a commercial basis, go to arbitration if that fails, or the regulator can set the price and quality of their service,” says the airline’s chief executive Greg Foran.
Neither of these options require new laws to be passed - the Commerce Act already provides options, so it’s not a case of more red tape, he said.
Auckland Airport said the Government should follow Australia’s example and actively monitor fares and performance of the market to ensure it is working for consumers.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
