Wellington Airport sues Air NZ for $7m

By CHRIS DANIELS

The increasingly bitter battle over landing charges at Wellington Airport has hit the courts, with the airport company suing Air New Zealand for $7 million in unpaid fees.

Wellington International Airport (WIAL) hiked its aeronautical charges by 78 per cent in February, after 19 months of fractious negotiations. One of the two main customers, Qantas, is paying the new rates, but Air New Zealand has refused.

WIAL has responded by filing proceedings in the High Court to force Air New Zealand into paying up.

The disputed sum of $7,057,000 was the combination of Air New Zealand's short payment of its February charges and what WIAL says is the airline's "breach of a contractual obligation to make a backdated payment in respect of charges for the period from July 2002 to January 2003".

Air New Zealand responded to the lawsuit with legal action of its own, yesterday asking the High Court for a judicial review of the price hikes.

While defending the $7 million claim, Air NZ is saying that WIAL failed to consult in good faith and that despite the 19 months of discussion, the increases were pre-determined.

Wellington International Airport is 66 per cent owned by listed investment company Infratil, with the remainder owned by Wellington City Council.

Infratil, in its latest update to investors, defended the new charges, saying the airport company was seeking to get a return on its investment in the new terminal that opened in 1999.

Airlines pay aeronautical charges to use the runway and terminal. Infratil says that over the past five years it had earned an unsatisfactory 3 per cent return on investments. With the new charges, it hopes to earn 10 per cent after tax in annual rate of return.

The airport company earns $17.5 million a year from aeronautical fees, but assuming the same number and types of planes land this year, the price rise will lift that income to $31.5 million.

Last July a Commerce Commission investigation, ordered by the Government, cleared Wellington of charging excessive prices, but noted that " ... if WIAL imposes a significant increase in charges" it would likely be satisfied of the need for price control on the airport.

Commerce Minister Lianne Dalziel is expected to make a decision at the end of next month on whether the Wellington price hikes require her to impose price controls.

"Air New Zealand remains optimistic that as a consequence of the very substantial increase proposed, the Minister of Commerce will introduce a price control regime," said the airline.

Air New Zealand also says that the introduction of its Express service has stimulated air traffic by up to 16 per cent at Wellington Airport, resulting in further "monopoly profit" for the airport company.