The cost of Auckland Airport’s $8 billion 10-year redevelopment plan is being passed on in airport fees and passenger levies likely to increase by more than 400 per cent over that time.
The national carrier claimed airport charges were likely to increase from $9 to $46 per passenger by 2032. That would be reflected in the price of air tickets.
The Qantas Group, which operates Jetstar and Qantas flights, has also asked for greater scrutiny of airport costs, adding its voice to industry groups like the Board of Airline Representatives New Zealand (Barnz) and its 26 member airlines, which have raised the issue with the Commerce Commission.
However, it’s regional airlines which say they are feeling the costs increase most sharply, for not much improvement.
Many smaller airlines, which provide the only connections to some regional airports, are concerned about the viability of their businesses.
Airlines at Auckland Airport’s regional hub say they have the rough end of the deal and are disproportionately affected by the rising costs.
Air Chathams described the proposed fee increases as “extremely challenging”, especially on top of increased rents for its hangars and office spaces.
Duane Emeny, its chief operating officer, said regional routes were experiencing greater per-passenger costs than larger airlines but they would not see any benefit from the redevelopment of the international terminal.
“We don’t feel it is fair to put this burden on small turbo-prop airlines with limited access to capital.”
Barrier Air chief executive Grant Bacon says small airlines are already facing pressure from industry-wide costs.
Air Chathams’ fleet of Saab 340s and ATR 72s provide the main air links for passengers and cargo to regional airfields, including the Chatham Islands. Increased airport fees would lead only to higher prices for customers, he said.
In the past decade, regional connectivity had been severely affected by increasing costs, with carriers either pulling out of routes deemed unviable or being forced out of the skies by operating costs.
“What’s really tough about the prices at Auckland Airport is that regional airlines like Air Chathams and Barrier Air will use very little of what the airport company is building,” Emeny said.
Barrier Air chief executive Grant Bacon said the increased airport costs came at a time when smaller airlines were already facing higher industry-wide charges.
Parts and engine costs for small planes were pushing up per-passenger costs.
“It’s a major issue for those running smaller aircraft but we’re facing similar costs as the bigger carriers in terms of passenger levies … Some costs have increased by around 100 per cent overnight. "
During the cost period FY23-27, Auckland Airport’s landing fees for small aircraft will jump from $60.24 to $115.04.
In July, regional airport charges increased from $4.40 to $7.10 per passenger.
As one of the main airlines operating between Auckland Airport and the Claris Aerodrome on Great Barrier Island, Barrier Air has had to use seasonal tourist fares to subsidise fares for residents. Bacon says it will have no choice but to pass on costs to passengers.
From April 1, fares for locals will rise by about 8 per cent.
With a limited number of travellers reliant on these air links, regional airlines worry that further increases could be pricing passengers out of the skies.
“Our margins are so tight and it’s not like if we disappear that those remote regions will have another airline right in behind us ready to take up the route,” says Emeny.
Regional airlines are hoping the Commerce Commission inquiry will create tighter regulation for airport pricing and that smaller airlines and their passengers are not left with a disproportionate bill for airport upgrades.
On Wednesday, Auckland Airport said much of its infrastructure improvements were long overdue, particularly in the domestic terminal.
“The pandemic meant we had to put much of this investment on hold and we are now in catch-up mode,” airport chief executive Carrie Hurihanganui said.
An airport spokesperson told the Herald it rejected suggestions that the infrastructure programme would make regional flights unaffordable.
“Auckland Airport’s domestic and regional charges have been rock bottom for years,” the spokesperson said, adding that charges were up to 50 per cent lower than at other New Zealand airports.
The airport says its charges currently make up 4 per cent of a regional airfare and are expected to average $8.15 per passenger by the end of the 2027 pricing period.
Domestic jet travel (Auckland to/from main centres):
Airlines’ domestic jet charges will average $11.85 over the five-year Price Setting Event Four (PSE4) period. Charges will initially rise $3.50 from $6.75 to $10.25. Auckland Airport says this is lower than current charges at Wellington Airport ($15.20) and Christchurch Airport ($14.60). Prices will then reach $15.45 by the 2027 financial year (FY27), the final year of PSE4.
Regional airline charges:
Airline regional charges will average $8.15 over the five-year PSE4 period. Regional charges will initially increase by $2.70 in July from $4.40 to $7.10. Auckland Airport says this is $3 to $4 cheaper than comparable current charges at Wellington Airport ($11.20) and Christchurch Airport ($10). Regional charges will reach $10.70 by FY27, the final year of PSE4.
International charges:
International charges will average $37.25 over the five-year PSE4 period. They will initially increase by $9.40 from $23.40 to $32.80. Auckland Airport says this is lower than current published equivalent charges at other major international airports in the region including Sydney ($42.20), Melbourne ($35.90) and Brisbane ($56.70). International charges will reach $46.10 by FY27, the final year of PSE4.
This month Auckland Airport applied for a review of the recent Commerce Commission input methodologies in the High Court. The commission is separately reviewing its four-year aeronautical pricing, which Forsyth Barr says creates some uncertainty as to the aeronautical returns outlook.
Thomas Bywater is a travel writer and multimedia producer for the Herald.
