Airport looking for 66pc fee increase

Wellington Airport's majority owner, Infratil, says a planned rise in airport charges need not mean higher airfares.

Wellington Airport is aiming to increase "aeronautical income" to $40 million from $24 million now, a 66 per cent increase.

Infratil, an investor in infrastructure businesses, says the airport charges will increase from July 1 after the expiry at the end of this month of a five-year agreement on charges with airlines.

It owns 66 per cent of Wellington Airport; the Wellington City Council owns the rest.

"The cost for consumers will depend on how the airlines package up the deal, it would be fair to say," said Morrison and Co executive Tim Brown. Morrison and Co manages Infratil's investments.

Air New Zealand announced last week that it intended to substantially reduce its airfares as part of a new no-frills strategy that would end business class and meals on domestic flights.

Brown said Wellington Airport's aeronautical charges had been fixed for five years but that had not stopped airlines increasing domestic airfares 43.2 per cent in that period.

"So obviously in the last five years you would say whatever the airlines have been doing with their prices, it certainly has not been anything Wellington Airport's done."

At present, Wellington Airport's aero charges are levied on each aircraft landing, per passenger and on some assets.

For the March year, Wellington's aero revenue was $6.49 per passenger, Infratil said.

That is half what Auckland Airport receives in aero revenue. Last year, Wellington received aero revenue of $6.57 a passenger compared with Christchurch's $7.90 and Auckland's $12.62.

Brown said that if airlines passed on the increases, travellers might be looking at an extra $3 a fare, if Wellington aimed to receive as much a passenger as Christchurch Airport, but that was oversimplifying how airfares were set.

He said the higher Auckland and Christchurch aero revenue was due largely to those airports servicing larger numbers of international passengers who faced higher charges such as departure tax.

Eighty per cent of Wellington's passengers were domestic and the rest were transtasman travellers.

The airport charges had been fixed before Wellington Airport made a big investment in its terminal. The airport was making about a 3 per cent after-tax return on its $216 million of airport assets and was targeting a rate of 10 per cent, Brown said.

"The new charges will reflect the fact the airport at the moment isn't making a return at all on the terminal and is looking to make a return on the terminal."

Brown said the Commerce Commission had effectively endorsed its charging model. It was based on achieving a return on assets rather than setting charges per passenger on a comparable basis with other airports.

The airport was still consulting airlines over the charges.

"It would be fair to say there will be an increase in charges, all other things being equal from 1 July this year," Brown said.

Wellington Airport also earned $13 million on revenue from carparking and retail activities.

- NZPA

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