Airport comes clean on need to increase fees

By DANIEL RIORDAN

Auckland International Airport has revealed for the first time the profit it makes on its "non-competitive" operations - those parts of the business where it has monopoly control.

The return on the three non-competitive segments - 3.1 per cent on assets - are likely to strengthen the airport's case in its dispute with airlines over higher landing fees.

The disclosure, required under the Airport Authorities (Airport Companies Information Disclosure) Regulations 1999, comes as Air New Zealand, with backing from its industry peers, prepares to take the airport to the High Court over recent increases in landing charges and the international departure tax.

Last August the airport decided to raise landing charges 8.5 per cent in the year beginning September 1 and 5 per cent in each of the following two years.

The departure fee was raised $2 to $22.

Air New Zealand claims the airport failed to consult properly before raising the charges.

Yesterday's disclosure relates to operations where only revenues were reported previously.

Airfield activities returned a net after-tax profit of $13.58 million on assets of $312.75 million (a return of 4.3 per cent).

Passenger terminal activities made $2.09 million on assets of $209.54 million (1 per cent) and aircraft and freight activities returned $1.26 million on assets of $22.67 million (5.6 per cent).

Combined, these three non-competitive segments made $16.94 million on assets of $544.96 million, a 3.1 per cent return.

This compares with the airport's total profit for the June year of $51.05 million on assets of $841.32 million, a 6.1 per cent return.

Most of the gap in profit can be attributed to the company's retail operations.

Although the airport's returns look modest, the airlines are unlikely to be appeased. They have disagreed in the past with the airport's calculation of its asset base, claiming that by inflating its assets, it makes returns appear more acceptable.