Government outlines air fare rise options to fund security

Travellers using provincial airports to leave New Zealand may face a hefty surcharge to cover increased security costs.

Finance Minister Michael Cullen said the Government had agreed to contribute $55 million for extra costs at the seven international airports, leaving the industry to pay $49 million a year.

He unveiled three ways to pay the bill, saying it had not been decided how the costs would be spread around Auckland, Wellington, Christchurch, Palmerston North, Hamilton, Dunedin and Queenstown airports.

Passengers using regional international services face the biggest fare increases. The extent to which "user-pays" applies will determine which option is adopted.

Queenstown has the fewest passengers - 8000 a year - and would attract the steepest increase if full costs were imposed - an extra $121.15 a trip.

Regional airport passengers will also pay a small charge of up to $5 a ticket for biosecurity and customs.

The Government will continue to pay the full cost of those services for major metropolitan airports.

Tickets for passengers using the big Auckland, Wellington and Christchurch airports will increase between $6 and $12 as a result of extra security costs.

In what Dr Cullen described as a "sting in the tail", the package creates further barriers for those wanting to establish new international services.

"New airports will bear the full costs of Government services. So those proposing new airports will have to factor that into account when they look at the economics."

Tauranga, Napier and Rotorua are all considering adding those services to their domestic airports, and Waitakere City and Infratil have been promoting an airport with international services at Whenuapai.

Dr Cullen said airports were costly for the Government, especially those with low passenger numbers.

The Government now pays $36 million towards passenger clearance and the industry $18 million.

Dr Cullen conceded that Queenstown would not be happy with the last scenario but "I think it's most likely the choice will be between the first two".

Board of Airline Representatives chairman Stewart Milne said the group was "reasonably comfortable" with the way the Government was contributing to the cost of changes to border protection and security.

Work would begin in February on how the industry part of the cost would be divided among the different parties - such as the airlines and airports.

A spokesman for Auckland International Airport said: "We are not unhappy ... But we are reserving any further comment until the industry has consulted as to how the charges will be recovered."

Wellington International Airport chief executive Simon Draper called the tiered proposals "anti-competitive".

Tourists wanted to be able to access regional locations quickly and price rises and a minimal number of international terminals would ultimately be a disincentive to come to New Zealand.

Infratil executive Tim Brown this week accused the Government of creating hurdles to the Whenuapai plan to protect Air New Zealand.

He said yesterday, "We don't see Government antagonism to Whenuapai and the new border charges as a coincidence".

National finance spokesman John Key said his party supported some user-payers recovery at the borders, although it had yet to see the calculations used for setting up the new taxes.

But he said Labour had done a u-turn on the issue, made worse by Helen Clark's criticism of the former National Government when it instituted a $30 million border recovery programme.

He quoted a speech given by her in 1999 to the aviation industry where she said border control was a core responsibility of the state.

DEPARTURE COSTS

Options for new costs:

Across-the-board increase of $8.16 per passenger flight.

A two-tier metro/regional charge, with metropolitan users paying an extra $7.50 and others an extra $25.08.

A location-specific charge where Auckland users would pay the least extra - $6.24 - and Queenstown the most at $121.15.

- additional reporting Chris Daniels