Auckland Airport (AKL) received strong push back from its two biggest airlines—Air New Zealand and Qantas Airways—after unveiling plans to increase per-passenger aeronautical charges to raise NZ$2.5 billion ($1.5 billion) for infrastructure projects.
AKL announced it will lift its price-freeze (in effect for the past year) from July 1, raising per passenger charges on domestic flights from NZ$6.75 currently to NZ$10.25. Over the five-year period through 2027, domestic charges will average NZ$11.85, topping out at NZ$15.45 in 2027.
International flight per passenger charges will rise from NZ$23.40 currently to NZ$32.80 from July 1, and average NZ$37.25 over the five-year period. International charges will reach NZ$46.10 by 2027.
In a lengthy statement released with the announcement of the price hikes, Auckland Airport CEO Carrie Hurihanganui defended the new charges, saying the money raised will “fund part of the much-needed investment in infrastructure that is underway at Auckland Airport.”
For the five-year period through 2027, “this amounts to NZ$2.5 billion of commissioned infrastructure, focusing on important airfield, terminal, baggage and transport improvements to be completed and in use by airlines by the end of the five-year period,” she says.
Hurihanganui adds that the prices are being raised from a relatively low level, noting that “international charges have fallen 10% in real terms over the past decade. Our charges currently represent about 3% to 3.5% of the cost of an average domestic or international fare.”
Qantas and Air New Zealand reacted to the price hike by releasing a joint statement, saying they are “united in their opposition to the scale and cost of Auckland Airport's planned redevelopment and are calling for an urgent rethink of the plan.”
The airlines say they have both presented AKL with an economic analysis of “network impact” if the new charges are implemented, showing “the cost of the airport's planned redevelopment is predicted to increase airport charges to the point that air travel may become unaffordable for a significant number of travelers.”
Hurihanganui says the charge increases “have not been introduced lightly, particularly in the current economic environment. We are very mindful of the cost to our airline partners and ultimately travelers." She explains AKL has "considered what we need to invest to ensure Auckland Airport’s infrastructure is at an appropriate standard, capable of delivering a good customer experience for expected passenger numbers and is resilient for the future.”
Hurihanganui adds that the new charges “are in line with other comparative airports in the region.”
The airlines note that AKL acknowledges the NZ$2.5 billion will not be sufficient to cover planned projects, with more money needed beyond 2027. The airlines estimate the total cost of planned projects will reach NZ$6 billion. “As such, there will be significantly more costs to come in the future,” the airlines state.
Air New Zealand CEO Greg Foran says the airlines “agree that some investment in Auckland Airport is necessary,” but adds: "However, this is an enormous spend over a short period of time that adds almost no additional capacity. All it is expected to result in is more costs for everyone who uses, relies on, or passes through the airport, including the aviation industry, the tourism industry, the whole economy, and Air New Zealand's passengers."
Qantas CEO Alan Joyce says the airlines “accept that investment is needed, but what [AKL] is proposing goes far beyond what is needed or affordable.”
The airlines are jointly calling for a “pause on major growth programs [at AKL] and their enabling projects while an affordable plan is developed, either through reducing cost or exploring a more workable funding and pricing model.”
Auckland Airport is served by 22 airlines operating to 37 destinations. International seat capacity was 91% recovered at the airport in May compared to May 2019, while domestic seat capacity was 89% restored.
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