Levies may push up airfares: Jetstar

Bruce Buchanan. Photo / Brett Phibbs

Jetstar warns it could have to push up fares if it is hit with New Zealand safety levies it says it already pays in Australia.

The bitter row over levies - worth about $1.70 per passenger on a domestic flight and about half that on transtasman flights - is heading for a showdown between the airline and the Civil Aviation Authority (CAA).

Jetstar says the $12 million it pays to the CAA's equivalent in Australia covers safety oversight work done in New Zealand.

A transtasman aviation agreement allows reciprocal safety oversight in both countries.

Jetstar accuses the authority of trying to hit an easy target to boost its sagging finances and says there has been inadequate consultation.

The CAA says it receives nothing for oversight work it does on Jetstar. The airline also had a loophole in fuel tax payments across the Tasman which go towards safety levies, CAA spokesman Bill Sommer said.

"At the moment they're not paying anything for their operations in New Zealand because they're not subject to the fuel tax that they would be when they're flying in Australia," he said.

About $4.3 million a year is being sought by the CAA from Jetstar.

The airline's chief executive, Bruce Buchanan, said in April the Ministry of Transport had indicated the Australian Civil Aviation Safety Authority (Casa) would be responsible for safety oversight for Jetstar "and for recovering the cost for that oversight".

"This oversight function involves Casa undertaking a range of key duties including audits, inspections, certifications, assessments and approvals of Jetstar's operations in New Zealand."

Casa staff had periodically travelled to New Zealand to monitor the airline but if the CAA had done any regulatory work, it should recover the costs from the Australian authority, he said.

"The additional levies proposed by the CAA, which amount to 83 per cent of what other carriers pay in New Zealand, clearly are not related to any direct services provided to Jetstar," he said.

A Casa spokesman said it was a commercial matter for Jetstar.

"We charge all Australian airlines fees for regulatory services and a percentage of the fuel excise is allocated to Casa by the Government."

Jetstar would not say by how much fares could be affected by the levies which could be imposed by the end of the year.

"The levy and its cost would naturally need to be absorbed into our own cost base and into domestic New Zealand and transtasman fares. It would need to be reflected in our fares," a spokesman said last night.

The dispute is heading for Transport Minister Steven Joyce's desk.

"The Ministry of Transport is now preparing advice for the minister which he expects to receive shortly, a spokeswoman said.