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A war of words has erupted between Air New Zealand and Auckland Airport after the airline called for a government inquiry into the airport’s “overspending”.
The carrier says Auckland Airport’s multi-billion-dollar redevelopment, to take place over 10 years and be funded in part by increases to aeronautical charges, will lead to “unaffordable airfares for some Kiwis”. It has lodged an official request with NZ Commerce Minister Andrew Bayly for an inquiry.
Greg Foran, CEO of Air New Zealand, said that while the new airport will “look great”, it will not include an additional runway or deliver much new capacity, and that “the value of the airport’s asset base, which dictates the size of its charges, will have increased per-passenger domestic charges five times, with more to come in the future”.
“Air New Zealand agrees the airport needs redevelopment, but not at a cost that means some Kiwis can’t afford to fly. This issue affects all passengers flying through Auckland Airport – especially those from the regions,” he said.
“Last year with the help of the same international experts that worked on AIAL’s 30-year Master Plan, we provided the airport with alternative terminal designs that would be significantly cheaper, while still providing a great facility. We also shared data on the serious impact their spending will have on demand for air travel. They have not paused and plan to keep pouring concrete.
“Auckland Airport will argue that it consulted with Air New Zealand, but it has ignored our warnings and there has been no meaningful change. It has received the same feedback from Qantas Group and BARNZ that this is not affordable and will cost the travelling public. The business case has been seriously questioned by IATA.”
Auckland Airport has hit back, however, saying that Air New Zealand – which is far and away the biggest player in NZ domestic travel – has commercial incentives to oppose airport investment to preserve its dominance and its profit margins.
“Investment creates additional capacity that enables airline competition – which is good for customers and the cost of airfares,” a spokesperson said.
“Air New Zealand, which is subject to no economic regulation, holds 86 per cent of New Zealand’s domestic travel market and hiked its average domestic and regional airfares by up to 55 per cent or $70 a fare following the pandemic.
“This has a significant impact on airfares, particularly in the regions. Regional airfares grew 16 per cent between 2022 and 2023 alone. Today airfares across the domestic market remain 32 per cent 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.”
The airport rubbished Air New Zealand’s alternative terminal proposal, calling it a “back-of-the-envelope design that simply isn’t viable”, and insisting that its charges make up a very small proportion of an airfare.
“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,” the spokesperson said.
“Auckland Airport’s charges make up a fraction of the cost of an average airfare – just 3 to 5 per cent. Auckland domestic charges have been 40-50 per cent 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 and other major airports in New Zealand. Prices for 2028 and beyond have not been set and remain subject to consultation.”
