A proposed reduction to flight passenger security levies will generate millions of dollars in annual savings for the aviation sector and meet the Government’s commitment to reduce levies once the sector’s regulator has stabilised post-Covid.
The Civil Aviation Authority (CAA) is consulting on a proposed five percent reduction in domestic and international passenger security levies following a faster-than-expected recovery in its cash reserves.
Associate Transport Minister James Meager said that improvements in CAA’s security operations and its overall financial position mean it is now in the position to charge airlines less while continuing to meet aviation security expectations and performance targets.
On current projected passenger volumes, CAA has estimated the proposed reduction would reduce levy collections by a cumulative NZD 70.935 million by 2032.
“The impact of a saving like that for airlines and the wider aviation sector would be huge.”
The proposal would reduce the domestic passenger security levy from NZD 10.91 to NZD 10.36 per passenger and the international levy from NZD 22.30 to NZD 21.19 per passenger, excluding GST.
At an individual passenger level, Meager said the amount may feel modest, but when considered collectively the benefit to airlines of being able to invest that money elsewhere will be significant.
Airlines pay the passenger security levies, which are calculated by passenger numbers. Any decision about whether or how a reduction is reflected in airfares is a decision for individual airlines.
Meager added that the CAA will consider the feedback it receives, then provide advice on possible levy reductions and timing.
"Maintaining effective aviation security outcomes remains fundamental. Where those outcomes can be delivered more efficiently, it is appropriate that the CAA considers whether the amount it collects from the aviation sector can also reduce.”
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