Qantas and Air New Zealand, the two largest customers of Auckland International Airport Limited, have 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.
Auckland Airport announced in March this year that it would spend $3.9 billion on the initial phase of the airport redevelopment over the next five to six years. Airport users will pay for the cost of that redevelopment.
Air New Zealand and Qantas have each provided Auckland Airport with details of their network impact, underpinned by independent economic analysis. This shows 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 travellers. This would impact both airlines, including Qantas' subsidiary Jetstar.
Auckland Airport has today made a market disclosure and published its increased aeronautical charges. Indicative per-passenger charges will double on international routes by the end of this five-year pricing period (FY27) and more than double on domestic. Given Auckland Airport's intention to spend billions more, there will have to be further significant increases in the next pricing period, the extent to which Auckland Airport has remained silent.
Both Qantas and Air New Zealand suggest that airports should be building their assets to fulfil the needs of their customers, and the two major airline customers don't agree with the scale and cost of the current plan. Auckland Airport may have only released the first phase of the redevelopment plan, and it appears that the costs will keep climbing. One analyst estimates the overall costs for phases one and two of Auckland Airport's four-phase master plan will likely be $6 billion. As such, there will be significantly more costs to come in the future.
Chief Executive of Air New Zealand, Greg Foran, said some investment in Auckland Airport was necessary.
"However, this is an enormous spend over a short period that adds almost no additional capacity. It is expected to result in 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 Chief Executive, Alan Joyce said that Airlines accept that investment was needed, but what Auckland Airport proposes goes far beyond what is needed or affordable.
"Based on Qantas' experience, the necessary first phase of this redevelopment could be delivered for significantly less than $3.9 billion, and we're conscious that the final number will probably be higher, with cost overruns common to most large infrastructure projects," said Foran.
Industry analysis shows the longer-term pricing outlook for airfares is downwards as capacity constraints ease globally. However, cost pressures for the airline industry are increasing, limiting how far airfares can fall. Both airlines are calling on Auckland Airport to reconsider its approach.
Both Air New Zealand and Qantas agree that Auckland Airport should invest efficiently and affordably in its infrastructure, building a good and efficient airport for the airlines that use it. Air New Zealand and Qantas suggest pausing major growth programmes and their enabling projects whilst an affordable plan is developed, either through reducing cost or exploring a more workable funding and pricing model.
They are investing some of the profits Auckland Airport earns from other services like parking and retail to pay for some of the projects and prioritising reducing the impact of the cost of infrastructure so passengers and those who use airline services can afford to keep flying.
