‘We’re not a cash cow’ – aviation sector reacts to soaring fees at NZ beauty spot

Milford Sound airstrip is popular with scenic flight operators. Photo / Milford Sound Scenic Flights

Aviation companies are being milked by new charges at Milford Aerodrome which will more than double landing fees and further dent the country’s faltering tourism recovery, says a sector leader.

Aviation Industry Association chief executive Simon Wallace said there may be some some justification for the rises, but the magnitude of the increases that have been confirmed are not sustainable for commercial operators.

From April next year, the fee for a fixed-wing aircraft over 2000kg will rise from $73 to $202 and for a helicopter from $25 to $69, association figures show.

The aerodrome is owned by Te Manatū Waka Ministry of Transport (MoT) on behalf of the Government.

The MoT consulted on the fee rises and tourism and associate transport minister Matt Doocey said the aerodrome was an important access point to a world-class visitor destination that many domestic and international tourists visit each year.

“There are costs associated with operating and maintaining access to a high-quality visitor experience and one way these costs can be met is through landing fees for the local aerodrome,” he told the Herald through a spokesman.

The aerodrome has not been able to cover its costs since the pandemic and the increase would enable it to do so.

Doocey said operators have already set prices for this summer season which is why they were implementing this change next year. The ministry is meeting the shortfall between July 1 this year and next March to operate the aerodrome.

“While the increase appears significant when considered in isolation as a landing charge, the landing fee is spread over the number of passengers in the aircraft, which could be up to 10. Ministry calculations show if operators passed this increase on to tourist passengers it would be an increase of less than $20 per ticket at most.”

In a consultation document, the ministry said forecast annual costs for 2025-27 are roughly three times higher than they were in 2018/19, before the pandemic.

Wallace said there was “only so much” that could be passed on to customers.

The announcement of new landing charges was another example of “both central and local government agencies treating aviation as a cash cow”, said Wallace.

“Only so much can be passed on to customers before they are not prepared to pay any more and the operators lose competitiveness – in other words, there is a price elasticity point.”

While there had been some tourism post-Covid, it is nowhere near pre-pandemic levels.

Statistics New Zealand last week showed visitor numbers at 80% of 2019 levels.

Add to this an increase announced before the Budget for the International Visitor Levy (IVL), and New Zealand will lose competitiveness, he said.

“The Milford situation is just the tip of the iceberg and symptomatic of a much wider problem. We have already seen Auckland Airport recently announce significant increases in landing charges affecting our members.”

Wallace said it was nonsensical to be charging such operators on their maximum certified take-off weight (MCTOW) when under Part 137 requirements, they can’t land at that rate.

“The agricultural and wider primary production sectors are experiencing challenging trading conditions, and when the likes of Hamilton Airport proposes significant increases, it is a real kick in the guts.

“What is even more galling about the situation with landing charges is the lack of consultation by airports, many of which are owned, part-owned or operated by local government entities.”

The aviation sector was also facing higher Fire and Emergency New Zealand (Fenz) levies which would place many commercial operators at financial risk, Wallace said.

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