Auckland Airport said airlines protesting about airport regulation and investment is nothing new.
The Commerce Commission is right in the middle of scrutinising what Auckland Airport charges airlines to use essential airport assets, with the process due to be completed in September this year.
The move to circumvent the review process is because Air New Zealand has strong commercial incentives to oppose airport investment, both to protect its profit margins and its dominant position in the domestic market. Investment creates additional capacity that enables airline competition – which is good for customers and the cost of airfares.
The post-pandemic rises in airfares and record profits by airlines in the 2023 financial year have demonstrated how lucrative constrained capacity can be for airlines and how much it can cost travellers when demand exceeds supply.
Air New Zealand, which is subject to no economic regulation, holds 86 percent of New Zealand’s domestic travel market and hiked its average domestic and regional airfares by up to 55 percent or $70 a fare following the pandemic. This has a significant impact on airfares, particularly in the regions. Regional airfares grew 16 percent between 2022 and 2023 alone. Airfares across the domestic market remain 32 percent higher on average compared to pre-pandemic.
"New Zealand has one of the least competitive domestic markets in the world and we encourage the Government to follow Australia’s example and actively monitor fares and performance of the market to ensure it is working in the interests of consumers," Auckland Airport said in a statement.
Auckland Airport has called time on the delay tactics.
The airport is getting on with building a resilient, fit-for-purpose airport that meets the needs of customers and supports the economy. Delaying infrastructure is not in the country’s best interests, nor can it build half an airport.
Auckland Airport said the alternative terminal being promoted by Air New Zealand is a back-of-envelope design that simply isn’t viable.
"It’s full of design holes: A bridge to nowhere; no room for essential security screening; lack of space for government border agencies; and missing a delivery facility for the hundreds of trucks that bring in goods each week so the airport can operate, to name a few examples."
Auckland Airport’s charges make up a fraction of the cost of an average airfare; approximately just three to five percent.
Auckland domestic charges have been 40-50 percent lower than other airports for many years, and that has been worth about $470m to Air New Zealand since 2011.
By 2027, Auckland Airport’s domestic charges will be at a similar level to current charges at other major airports in New Zealand. Prices for 2028 and beyond have not been set and remain subject to consultation.
