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Auckland International Airport yesterday pushed up its landing fees to offset spending on airport expansion and rising operating costs but would not reveal a dollar value of the increase.
The airport said it would increase its landing fees by by 2.5 per cent a year over the next five years, from September 1.
Chief executive Don Huse said it planned to spend $500 million on improving infrastructure over the next four years and the fee increase would be compensation for that, as well as significant new investment in infrastructure made over the past four years.
The increase, which Huse said was "broadly" in line with inflation, would also help cover the cost of efficiently running the airport.
Goldman Sachs JBWere analyst Marcus Curley said the fee increase was conservative compared with what he had predicted based on the revaluations last year.
The airport had taken an "awfully conservative" approach, he said, probably in order to avoid any backlash from the Government or the Commerce Commission.
Unsurprisingly, the announcement sparked howls of protest from airlines smarting at what will be a 13 per cent increase overall. Air New Zealand said there was no justification for the increase and it "exposed the failings of having no effective regulatory regime to protect the interests of travellers from monopoly abuse".
Chief financial officer Rob McDonald said the charges were simply being imposed and that Air New Zealand had not reached agreement with the airport over the level of the new charges.
Board of Airline Representatives spokesman Stewart Milne said the airport's aeronautical charges were already high, and there was no justification for further increases.
Milne said the airport was the second most profitable in the world according to figures from the London Transport Research Laboratory.
During the consultation period between airlines and Auckland Airport there was "some recognition" by the airport that its previous price set in 2001 had resulted in over-recovery, Milne said.
The board also took issue with the airport's decision to impose a 10-year moratorium on asset revaluation for aeronautical assets.
Last year the airport company doubled its asset value from $1.3 billion to $2.7 billion, prompting fears from airlines that increased landing and passenger charges would follow.
The airport said yesterday that it would credit airlines with $99 million for unanticipated land revaluations since the last pricing period in 2001.
That figure represented more than half the amount of unforecasted increase in airfield land value, the company said.
Milne said the $99 million was only a portion of what should have been credited to comply with the commission's approach - as recorded in the November 2004 Gas Control Inquiry, which said "any revaluation gains/losses on assets to be treated as income".
But Huse said the airport had followed the "pragmatic" recommendation to asset revaluation by Australia's Productivity Commission that Sydney, Melbourne and other airports continued to be subject to price monitoring for a further six years.
Fee rise
* Auckland Airport will increase landing charges by 2.5 per cent a year for the next five years.
* It says the rises will help cover increased spending on infrastructure.
* Board of Airline Representatives says charges are already high and the increase is unjustified.
