Airports Council International Asia-Pacific and Middle East director-general Stefano Baronci.
A global airport boss says he got a first-hand taste of why Auckland’s new domestic terminal can’t open soon enough.
Airports Council International Asia-Pacific and Middle East director-general Stefano Baronci said it was lucky he was fit enough to make a tight connection between a (disrupted) international flight and a domestic one when he arrived in New Zealand.
Baronci recounted his own experience of doing the open-air dash between the two terminals when asked about complaints about getting through Auckland Airport.
“It’s true. Moving from an international terminal to a domestic terminal with less than an hour available for connecting was a tough call, to say the least.”
He did make it to Christchurch, where he’s at an Airports NZ conference, but the experience had sharpened his focus on friction between Auckland Airport and airlines over charges which are set to soar over the next four years.
“Immediately, my mind moved back to what happened at Rome Airport. Airport charges had been frozen for 15 years. Passengers were complaining like hell,” said Baronci, who is Italian.
“In the case of Auckland, I can see that similarly, charges have been frozen for a certain time and the investment couldn’t be made.”
Auckland’s ageing domestic terminal is being replaced with a new one integrated into the international terminal as part of a $3.9 billion building programme. But it won’t be open until the end of the decade at the earliest.
Baronci said airports that had been “neglected” stand out.
“I was connecting from Singapore - you immediately compare it, and you say, ‘[Auckland] is not up to the task’. So we need to find a balance here. The point is quality of the service, and meeting the expectation of the passenger means also investing, and that investment is a cost.”
Passengers, many of whom were flying long-haul, would be prepared to pay more for a better airport experience rather than, in the case of Auckland Airport, following the green line on the path between the terminals.
”Rather than saying, ‘I have to run and follow the green line, but I don’t know where the green line ends’.”
While his airport experience in Auckland wasn’t great, he also pointed out that his flight from Bangkok through to Singapore hadn’t been great either, with airline delays meaning he made it to New Zealand a day later than planned, and he was also shifted from business-class to economy on one leg.
Airports Council International (ACI) is highlighting the “alarming” surge in airfares as travel recovers strongly.
A study by Flare Aviation Consulting for ACI shows international airfares increased by as much as 50 per cent, while domestic routes saw an increase of about 10 per cent between the fourth quarter of 2019 and the same period in 2023. Nearly 40,000 routes were studied, and the markets that have seen the highest increases are India (41 per cent), the United Arab Emirates (34 per cent), Singapore (30 per cent) and Australia (23 per cent).
“There is no doubt that the airlines are taking advantage of the low competition and pent-up demand in order to spur profits and make up for the losses sustained during the pandemic,” he told a conference in Japan.
The factors contributing to the increase in airfares are high fuel prices and inflation. Fuel prices went up 76 per cent in 2022 compared to 2019. The airlines’ costs increased as the CPI saw an average 10 per cent increase over the same period.
“Having said this, it is worth noting that several major international airlines recently announced record profits for 2022. In contrast, airport operators have been reporting negative margins for the last 10 consecutive quarters, particularly in China, Japan, Thailand and India.”
In this country, Air New Zealand swung back from heavy losses to report its second-best underlying profit ($570 million) for the 2023 financial year, while Auckland International Airport is also back in the black, with its underlying profit $148.1m compared to an $11.6m loss the previous year.
Stats NZ CPI data shows international air transport here increased in price by 20.5 per cent between the second quarter of 2022 and this year. Domestic fares went up by 31.2 per cent in the same period.
Baronci said airlines should use fair pricing that promotes recovery and protects the interests of customers.
“They also shouldn’t exploit a supply-demand imbalance by limiting capacity, especially for international travel, which is a major driver of social and economic development and a major source of revenues for the airport sector.”