Airport owner hits airlines on two sides

By CHRIS DANIELS aviation writer

Infratil, two-thirds owner of Wellington Airport, has issued a detailed criticism of Air New Zealand's plans to join forces with Qantas, and offered a spirited defence of the hefty rise in the fees it charges airlines.

In its latest market update, Infratil describes Wellington International Airport, which it co-owns with the city council, as a "relatively low-risk business".

"However, it is not riskless and cannot be satisfied with the 3 per cent returns it has been achieving since the substantive terminal investment in 1999."

It now wanted a 10 per cent after-tax annual return on its aeronautical business over the next five years.

This year's 77.7 per cent fee rise has enraged the airlines, particularly Air New Zealand, which is the airport's biggest user.

Board of Airline Representatives executive director Stewart Milne said recently that the increase was evidence of an airport company "out of control".

It had set its fees in complete disregard for the recent Commerce Commission report into airfield pricing.

Yesterday Infratil also outlined more of its reasons for opposing a proposed alliance between Air New Zealand and Qantas.

Infratil says the alliance would be anti-competitive.

"An important part of Air New Zealand's case for the alliance with Qantas is the assertion that without an alliance, one of the airlines will withdraw from the New Zealand domestic market and Air NZ will be obliged to reduce its international services," says Infratil.

"Both developments are unlikely. If the alliance progresses it will adversely impact air travel within, into and from New Zealand."

Since the Government had already invested $850 million in Air New Zealand and declared the company to be crucial to the nation's wellbeing, it was not difficult to expect Air New Zealand's interests to be placed ahead of the interests of airline users, it said.

New Zealand could support more than one airline operating domestically, especially with the stimulation of the market that resulted from the recent introduction of cheap fares.