Air NZ returns Infratil attack

Air NZ and airport owner Infratil have begun a slanging match over why the airline has not increased air capacity into Wellington Airport.

This scrap began with Infratil's monthly "email update" to the stock exchange, saying June was a "disappointing period for domestic travellers" at its two-thirds owned Wellington Airport.

The number of seats flown into Wellington by the financially troubled Origin Pacific had fallen by 54 per cent compared with last year. Air NZ had not increased its own capacity to compensate for this loss.

"With respectable load factors of 73 per cent, a collapse in regional capacity and diminished competition, it is not surprising that regional customers are voting with their feet," Infratil said.

Cue angry reaction from Air NZ, also delivered in a statement to the NZX: "Infratil's comments around competition are baseless and display a lack of understanding of our business."

Two planes were undergoing maintenance last month, and since it was an "off-peak" time, extra passenger demand was absorbed without the need to increase capacity.

"It is, however, surprising that Infratil have chosen to comment on competition when they enjoy substantial pricing power through their majority stake in Wellington Airport - a monopoly."

Operating profits at Wellington Airport are more than 580 per cent above Infratil's Glasgow Prestwick Airport, the airline said.

"Competition on the Tasman clearly illustrates that barriers to entry are low, which has resulted in significant overcapacity and unsustainably low fares."

There is no love lost between Infratil and Air NZ, with numerous disputes over landing charges at Wellington Airport forming the contentious heart of their relationship.

Infratil led the charge against Air NZ's failed attempt to join Qantas in an anti-competitive alliance, helping to pay for top lawyers and consultants to give evidence against the deal.

Air NZ is still trying to pursue a deal with Qantas, possibly code-sharing on flights, which has the potential to cut the number of aircraft flying into Wellington Airport.