Airport's big profit and rising fees upset airlines

By DANIEL RIORDAN

Any way you cut it, the cake at Auckland International Airport keeps getting richer - to the chagrin of some of its key airline customers.

The airport yesterday posted a record profit of $51 million for the year to June, 20 per cent ahead of last year's $42.4 million.

On the same day, its controversial new landing charges kicked in.

The airport has raised its charges by 8.5 per cent this year with further increases of 5 per cent in each of the next two years.

Analysts expect those increases, together with a $2 increase in the international departure fee to $22, to boost net profit for the June 2001 year by at least $3.8 million, or 7 per cent.

Airlines, led by Air New Zealand, are up in arms at the increases, claiming the revaluation of the airport's assets which lies behind the higher charges is flawed, a claim hotly denied by the airport.

Airport managing director John Goulter rejected the airlines' suggestion that the airport had allocated charges for commercial property against airport activities.

"The emphatic answer is 'No, we are not doing that.'

"Given that everything is going to be reviewed by the Commerce Commission in its review of airfield pricing, and all of our books will be open to scrutiny in every sense of the word, then it's mischievous for people to suggest that we might be doing underhand things."

The Commerce Commission, due to report to the Government by August 2002, has yet to begin its work.

Airlines representative Richard Hall said it was hard for the airlines to swallow such a marvellous result for the airport.

"There's a lot of irony in the timing. We are disappointed in the way they are treating the customers who have delivered them the passengers who have given them this result.

"The airport has said consultation is finished but we don't think so."

He said a decision on how the airlines would proceed would probably be made next week. He declined to comment on the possibility of court action.

The profit result was slightly ahead of average market expectations. CS First Boston research head Rob Bode said a feature was the surge in international passenger numbers over the year's second half.

Total revenue of $170 million was up 6 per cent from $160.3 million.

Operating expenses were trimmed 2.5 per cent, from $47.5 million to $46.3 million.

Passenger numbers passed 8 million for the first time, with around 4 per cent growth in both domestic and international.

Retail revenue rose 27 per cent and airfield revenue 30 per cent. Mr Goulter said retail revenue ($50.6 million) would continue to creep ahead of airfield revenue ($46.4 million).

Mr Goulter also had good news for travellers weary of long queues at customs. The airport was talking to the Customs Department about passengers being able to clear customs in the duty-free areas.

Customs spokesman Kevin Loughlin said the duty-free plan was one of several initiatives being considered to improve the speed and ease of passenger processing. A decision was some way off.

Airport shares, which have gained 31 per cent over the past four months, fell 1c yesterday to 295c.

The stock continues to benefit from the increase in tourism (arrival numbers up 10 per cent on the year) and a re-rating of airport companies worldwide, particularly in Europe.

The Tourism Board predicts visitor numbers to rise almost 20 per cent over the next two years.

Mr Goulter said the airport's challenge would be to develop the infrastructure to cope with that increase.

Plans to build more check-in counters, air bridges and gates were being considered.

Activity since balance date had continued to be strong and Mr Goulter was expecting a fillip in passenger numbers from the Olympics.

Property development prospects remained buoyant. Projects under way included a supermarket.

The company announced a final dividend of 5.2c, fully imputed and payable on November 21. That brought the total dividend to 9.7c, compared with 8c the previous year.