NZ airlines call for urgent inquiry into AKL airport redevelopment regulations

Air New Zealand, Air Chathams, Barrier Air and Jetstar have issued a joint statement expressing concern over the scale and cost of redevelopment plans for Auckland Airport (AKL).

One of the airport’s projects is a new domestic terminal to replace the existing 57-year-old Domestic Terminal Building. Integrated with the international terminal, the airport said it will improve service quality and customer experience, especially for transit passengers, and provide capacity for long-term growth in passenger numbers.

In the statement the Kiwi airlines said they support the Commerce Commission of New Zealand’s findings that AKL Airport’s revenue and targeted returns are in excess of what the commission considers to be “reasonable”.

According to the findings, Auckland Airport is targeting a return of 8.73% from priced aeronautical activities, compared to the commission’s estimated reasonable return of between 7.28% and 7.51%.

“Some price increases are necessary to fund the investment needed to improve customer experience, build more resilient infrastructure and add additional capacity. However, in our view the Airport’s charges over the five-year period are in excess of what is reasonable to achieve these outcomes,” Commissioner Vhari McWha said in a statement.

“These charges are a cost to airlines, and while it is up to each airline to manage these through airfares, we are conscious that travelers are likely to bear much of that cost when using Auckland Airport – and they don’t really have a choice, which is why we have a role as regulator in reviewing pricing,” McWha continued.

The NZ airlines have claimed that the targeted revenue and returns from the redevelopment would ultimately leave the traveling public footing the bill and domestic travel becoming less affordable for many.

“While the Commerce Commission’s draft suggests that the investment in Auckland Airport’s development may be appropriate, this is not a view shared by many of Auckland International Airport Limited’s aeronautical partners and that will be a strong feature of the response to this draft report,” the airlines said in a statement.

The domestic airlines are calling on the NZ government to “urgently” commission an independent inquiry into Auckland Airport’s regulation.

“New Zealanders are in the midst of a cost of living crisis and businesses are cutting costs, the last thing they need is for more costs to be piled onto travel because Auckland Airport isn’t acting in the best interests of New Zealanders,” Air New Zealand Chief Executive Greg Foran said.

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