Fees flak forces airport to discount

By DANIEL RIORDAN

Auckland Airport is trying to avoid court action by offering an olive branch to airlines upset at its higher landing charges.

The company has offered all airlines a one percentage point reduction in the higher landing charges set for this year.

The airport raised the charges 8.5 per cent on September 1.

Chairman Wayne Boyd told shareholders at the company's annual meeting yesterday that two large international airlines had already accepted the offer and five other carriers were considering it, including Air New Zealand, which is scheduled to take the airport firm to the High Court.

Airport managing director John Goulter said after the meeting that most of the 26 airlines using Auckland had expressed interest in the deal.

The company will not identify the two airlines that have accepted, other than to say each is designated a substantial customer under the Auckland Airport Act because each pays more than 5 per cent of the airport's total landing charges, which last year came to $46.4 million.

The Business Herald understands that the two are Qantas and freight carrier Cargolux, whose parent is based in Luxembourg.

The airport decided in August to raise landing charges 8.5 per cent in the first year, and 5 per cent in each of the following two years.

Air NZ (and subsidiaries Air Nelson, Eagle Airways and Mount Cook Airline) has led the opposition to the increases - and a higher international departure fee - taking its complaint to the court and claiming the airport failed to consult properly before raising the charges.

Air NZ is also claiming a partial refund of the landing charges it has been paying under protest since last November 27, also on the basis of inadequate consultation. To the end of September those charges totalled $16 million.

Mr Boyd said Air NZ had been paying the old landing charges since September 1, but the airport had no intention of blocking access to its facilities.

He expected the court to set next month a date for the case and said the airport would vigorously defend the higher charges.

Air NZ had no comment on the airport's offer, saying the whole issue of landing rights was before the courts.

But it would surprise everyone if the airline accepted.

The executive director of the Board of Airline Representatives in NZ, Stewart Milne, said the board remained opposed to the airport's offer, and most of its members would not accept because it would prejudice their right to legal recourse against the airport.

He declined to comment on Qantas' decision. Cargolux is not a member of the board.

Meanwhile, the airport is forecasting a rise in profit of about 10 per cent for the year to next June.

The annual meeting was told that the number of international passengers arriving and departing rose 3.8 per cent in the first quarter, to September 30, compared with the same period last year.

International flight movements rose 6 per cent, with domestic flight movements up 1.2 per cent and domestic passenger numbers up 5 per cent.

Profit last year was $51.05 million, 20 per cent up on the previous year.

Mr Goulter said the increases were particularly pleasing given that the corresponding quarter last year included the boost in traffic from the Apec summit.

Mr Boyd said that with about $25 million a year being spent on runway work, the company was not achieving its weighted average cost of capital for airport service assets. Details would be given in the audited accounts, due for release on November 30 under new disclosure rules.

Shareholders approved without discussion a rise in total directors' fees from $215,000 to $245,000. The company has six directors, but can increase that number to eight under changes made to its constitution at the meeting.