Our infrastructure needs upgrading to ensure we are fit for the future – our roads, fuel systems, utilities, airfield, terminals and stormwater.
Failing to do this now will only come at a higher cost in the future.
Our domestic terminal is almost 60 years old. Customers are fed up with the travel experience it offers. It will soon be at capacity and it needs to be replaced. We need to address this and we are already playing catch-up, after putting much of the building programme on hold due to the pandemic.
The upgrade of Auckland Airport is hugely exciting. Far from just a renovation, it will transform the customer experience, with a new integrated hub to link domestic and international travel, along with public transport. Smart baggage systems will save time and reduce stress at either end of a flight. We will provide more gates and other facilities to help airlines smooth and speed-up turnaround times.
We have not reached these investment decisions alone.
Air New Zealand has been with us on this journey. We have considered more than 21 concept designs for a replacement for the domestic terminal since 2012. Just two years ago, the airline publicly supported our infrastructure development pathway, saying how important it was to continue investing for the benefit of the travelling public. We have since provided ample opportunities for Air New Zealand to contribute and provide alternative design solutions to reduce costs, incorporating this feedback into our plans.
Now the time has come for them to contribute to the costs of improving assets they use every day, Air New Zealand is asking us to put infrastructure development on hold. This overlooks the very real benefits to travellers and future resilience in return for what will remain highly competitive airline charges.
Because our domestic terminal is old, we’ve quite rightly been one of the most affordable airports for airlines to fly to domestically in the region – just $7 per passenger, and half the cost of other airports like Christchurch and Wellington.
An artist's impression of the new integrated terminal planned for Auckland Airport.
Domestic airlines have benefited from this.
Having such a low airport cost-base has allowed them to maximise returns from rising airfares, and there is a very strong incentive for them to retain this advantage for as long as possible. I get it.
We are also very mindful of cost. We know people are worried about what it costs them to fly to visit their friends and family. Our goal is to deliver a modern airport in a realistic way. Our business relies on travel, trade and tourism, just as the airlines’ business does. A solution that drives unnecessary costs would be counterproductive for all of us.
The increase in our domestic airline charges is modest and reasonable. These are charges that airlines pay as users of the runway, airfield, terminal and related assets. Over the next year, domestic charges will rise less than $4 per passenger. In 2027 domestic charges will be $8.70 per passenger higher than they are now – still representing a very small portion of an airfare. These cost increases will simply bring our charges to airlines in line with Wellington and Christchurch airports.
Our new charges will also be independently reviewed by our country’s competition watchdog, the Commerce Commission. We welcome this scrutiny, it is an important step to ensure that airports in New Zealand work to benefit the traveller.
By comparison, Air New Zealand – which has limited competition in the domestic and regional markets – is not regulated in this regard. It is also raising affordability issues at the same time as achieving record profits off the back of strong demand, higher airfares and constrained seat capacity coming out of the pandemic.
There are other reasons why delaying infrastructure is the wrong call.
For projects that are under way, turning the tap off and on again is not practicable. Cost escalation would only continue while projects were on hold. We’ve seen this play out before in New Zealand – infrastructure projects hitting the pause button to try to find savings, only to end up paying tens, if not hundreds, of millions more than the original cost in rapidly rising building costs. There are 300-plus employees and contractors already working on-site at Auckland Airport whose jobs could potentially be at risk if we were to stop mid-build, not to mention the further 1700 jobs that will be needed at the height of construction.
The arrivals hall at Auckland International Airport. Photo / Alex Burton
Constrained capacity is another issue.
We know people are tired of queues. Our modern new domestic terminal will process 44 per cent more departing passengers per hour, meaning people won’t have to wait so long. New gate and stand capacity also puts downward pressure on airfares by removing those impending capacity constraints.
Auckland Airport has a sense of responsibility and pride about being New Zealand’s gateway. Over 75 per cent of international visitors and 63 per cent of our country’s domestic and regional travellers visit here.
What we’re offering now simply isn’t good enough. We have to do better for the city, national economy and travellers we serve.
We are always open to discussions with airlines and adjusting our approach to the infrastructure build if there are new and viable options, but we cannot delay any longer.
It is not going to get any easier or cheaper.
Carrie Hurihanganui is CEO of Auckland International Airport.
