The missing billions: Auckland Airport bosses worried about flatlined tourism spending

Auckland Airport chairwoman Julia Hoare (left) and chief executive Carrie Hurihanganui.

Auckland Airport chiefs have renewed their attack on the steep rise in the international visitor levy as the recovery in tourism spending is at a standstill.

They say just as New Zealand faces increased competition from other countries, more needs to be done to entice tourists rather than hit them with extra fees.

The levy increased from $35 to $100 from October 1 for arrivals from countries excluding Australia and the Pacific Islands.

“We’ve been clear in our view on the visitor levy that we don’t think it’s a good idea to increase it, particularly if we start to think about New Zealand as a destination,“ said new company chairwoman Julia Hoare.

International visitor arrivals are running at around 80% to 85% of pre-pandemic levels, a figure they have been marooned on for most of this year, in an industry that was once the biggest earner of foreign exchange.

The airport is particularly worried about the slow recovery in the Australian market, which at June was running at 86% of pre-pandemic levels.

It has been estimated that at 80% recovered, New Zealand was missing out on a $3.6 billion contribution to GDP.

The big hike in the international visitor levy – used to pay for tourism infrastructure and conservation work – was widely criticised by aviation groups, tourism representatives and the International Air Transport Association which said it was a double whammy for those who were faced with steep immigration visa fees as well.

“These changes make travel to New Zealand more expensive and less attractive and could further delay the recovery in visitor numbers to beyond 2026. The recovery of the New Zealand aviation market currently lags behind major markets such as Australia, Canada, France, Spain, the United Kingdom, and the United States,“ said the association.

Auckland Airport is the country’s main international gateway and chief executive Carrie Hurihanganui said it was concerning the recovery had flatlined.

Other countries are enjoying a stronger bounce in their tourism recovery.

Australia and Singapore were around 95% recovered.

“I’m talking with a number of other big tourism operators about how we can engage with government, how do we pull together the strategy working with Tourism NZ [on] how are we getting out in the market to build back around New Zealand as an appealing destination.

“But it’s concerning that we have kind of flatlined.“

Although international capacity through Auckland Airport was 91% of pre-Covid levels, airlines were struggling to deploy aircraft here because of equipment and staff shortages.

“I’m confident we will see it come back, but I do think it’s going to be the next 12 months is going to be a slower trajectory of growth because there’s nothing new in terms of airlines coming back through.“

The airport was working with airlines but it was a shortage of aircraft that was holding them back from re-establishing frequencies on capital-hungry long-haul destinations such as Auckland.

She said Emirates wanted to add to its once-a-day frequency to Dubai and Qatar Airways’ investment in Virgin Australia could lead to a return of transtasman flights to centres in addition to Queenstown.

During the last year there had been a 29% increase in the number of international passengers using the airport – at 10.1 million.

North American airlines were back in force with a total of eight destinations in the US and Canada with a 48% increase in available seats.

US travellers to New Zealand have the highest median daily spend of all visitors. They contributed $1.4b to the economy in 2023.

Capacity between New Zealand and China had recovered. Six airlines now connect Auckland to seven destinations in China. With the addition of two new routes – Haikou from Hainan Airlines and Hangzhou from China Eastern Airlines – seat capacity on routes to China between April and October 2024 is at 114% of 2019 levels, and passenger numbers are steadily following.

And despite the sluggish recovery now, Auckland Airport forecasts international movements are due to increase by more than 45% to 14.4 million per year. Domestic movements are forecast to grow from 8.5 million to 11.9 million per year.

A new EY study found the airport supports 25,000 jobs and contributes $35.1b in economic output per year.

Of that $35.1b of economic contribution, $26.9b is supported by international travel, $6.8b is supported by domestic tourism, and $1.4b of economic output is supported by employment at the airport precinct itself.

“If those big numbers are hard to visualise, another way to look at it is that every time you see an international flight coming into land – that’s $1.4m of economic output flying in,“ Hurihanganui said in a speech at the annual shareholders meeting.

More than $26.6b of trade flows through Auckland Airport, the second busiest import channel, after the Port of Auckland, and the second-most-valuable export channel after the Port of Tauranga.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.