Battle of Whenuapai: Australasian airline group flies into push for another airport

Airlines on both sides of the Tasman want Whenuapai assessed as an alternative for flights. Photo / Supplied

A transtasman airline lobby group has waded into the debate over opening up Whenuapai airbase for domestic flights, saying it wasn't surprised alternatives were being explored to Auckland's ''sub-optimal'' main gateway.

The renewed push comes as an analyst explains what's driving the push and weighs up the impact of such a move for travellers and the airport company.

Auckland Airport's infrastructure deficit was costing travellers, airlines and New Zealand's economy, says Airlines for Australia and New Zealand.

"It's not surprising that airlines are exploring alternative options for services into and out of Auckland airport, which delivers a suboptimal experience at a high cost to travellers,'' said A4ANZ chairman Graeme Samuel, previously chairman of Australia's competition regulator, the ACCC.

Last week Air New Zealand chief executive Christopher Luxon revived a long-dormant push to open up the Air Force base as a dual-use airport.

Although there is some vociferous local opposition, scepticism about his motives and an initial thumbs down from Defence Minister Ron Mark, Luxon says it would bring down the cost of flying and open up the possibility of more regional flights.

Whenuapai has two runways, the longer of which is 2031m long, similar to the length of Wellington's runway. It could comfortably facilitate both domestic jet and turbo prop services.

Air NZchief executive Christopher Luxon is leaving the airline at the end of the month. Photo / Greg Bowker.

Samuel - whose group includes Air NZ, Qantas and Virgin Australia - today said travellers using Auckland Airport were getting a raw deal in both cost and experience and fundamental policy issues needed to be looked at.

''While A4ANZ welcomes the ongoing review of Whenuapai airbase as part of the Government's Defence Estate Review, a more immediate solution is required to address the egregious monopoly behaviour of Auckland Airport,'' Samuel said.

The airport says A4ANZ's view was ''completely at odds'' with written feedback
received in recent weeks from our airline partners, stating their support for its
infrastructure building programme and urging continued momentum.

The group's attack on Auckland Airport comes after Forsyth Barr analyst Andy Bowley assessed as remote the chances of the Whenuapai plan coming to fruition, but said it would create a headache for the airport at Māngere if it did.

It wouldn't have a significant impact on the airport's current earnings stream given domestic passengers generate substantially less income on a unit basis than international passengers.

However, it would seriously question the need for its planned Northern runway.

''This would remove a large chunk of AIA's capex programme over the next 10-15 years, which would impact its ability to leverage growth in its regulated asset base for aeronautical pricing and valuation (as we believe its share price incorporates a material multiple of RAB),'' Bowley said.

The airport planned to spend more than $1 billion on a new runway over the next 10 years but this may not be necessary if Whenuapai was opened up to commercial traffic.

The need for a new runway is due to its peak capacity constraints, Bowley said.

Whenuapai already has a runway and could operate a budget commercial passenger terminal. Air New Zealand has said the cost of setting up operations there could be as low as $200 million.

Bowley said there would likely be lower aeronautical charges and the location of the airport would be popular with passengers originating from, or destined for, Auckland's North Shore.

But he sees Luxon's comments as more of a parting shot at the Auckland Airport from Luxon who leaves his job at the head of the airline at the end of the month.

And he lists why the Whenuapai bid may not go ahead.

• The Government would need to support the proposal given it owns the air base and controls the air space. It would become a heated political issue, like it did more than a decade ago, both at a local and national level.

• Second, in recent years residential housing developments have popped up adjacent to the air base. More residential housing will be built in future. These residents may be subject to increased noise pollution.

• Third, transport links would be limited adding to traffic congestion, albeit the existing links to AIA are far from optimal.

''We think the likelihood of Whenuapai becoming a commercial reality is low. However, we wouldn't totally rule it out as there is some logic to AIR's (Air NZ's) arguments,'' said Bowley.

Christopher Luxon says a second airport would cut the cost of travel. Photo / Grant Bradley

Samuel says there is compelling evidence to show that the major airports in New Zealand have historically set prices that are designed to target large profits but are not in the long-term interest of consumers.

''Auckland Airport provides a clear case study of how this practice has continued over time – with the Commerce Commission noting in their 2018 review of AIAL's pricing decisions that airport operators were targeting excessive profits.''

Samuel said his group was pushing for changes in a review of the Civil Aviation Act that would bring more effective regulatory pressure to prevent excessive profits.

''As such, A4ANZ and its members are supportive of the proposed repeal of legislation which allows airports to "price as they see fit.''

The airport was forced to back down on aeronautical pricing earlier this year, cutting charges to airlines by $33m over five years.

However, the airport it says current domestic charges are among the lowest in Australasia, and it rank approximately mid-way through a group of 26 peer international airports for international charges.

Airport charges, on average, made up between 3 per cent to 4 per cent of the ticket price on a domestic flight - or $4.18 to $6.11.

These charges were closely monitored by the CommerceCommission each time it set prices – a regime which has only just been further strengthened with amendments to the Commerce Act last year, the airport said through a spokeswoman.

The airport - 22 per cent owned by Auckland ratepayers - acknowledged that the commission considered target return of 6.99 per cent for current five year pricing period was too high.

This had been trimmed to a 6.62 per cent target return.

''The airlines have asked Auckland Airport to invest – we are getting on with it. We welcome any discussions about how nationally significant infrastructure can be delivered in the most cost-efficient way for the benefit of all New Zealanders.''