Minister enters airport fees row

By DANIEL RIORDAN

The stoush over Auckland International Airport's landing charges is heating up, with Transport Minister Mark Gosche taking an interest.

Mr Gosche, who addressed the annual meeting of the Board of Airline Representatives in New Zealand (BARNZ) yesterday , has agreed to meet the airlines on the issue, according to board executive director Stewart Milne.

This follows the airport's decision to raise its landing charges by a cumulative 19 per cent over the next three years, following 10 months of often heated debate between the parties.

Mr Gosche could not be contacted last night but in his prepared speech notes he reminded airlines the Commerce Commission was to hold an inquiry into whether price control might be needed for aeronautical activities.

He also noted that other airports were yet to complete their consultation processes and said he planned to wait for these to be completed before considering the matter further.

Mr Milne said the airlines accepted the airport's right to set charges under new legislation, but would go back to the airport seeking greater justification for its increases.

Meanwhile, Air New Zealand, which is leading the airlines' opposition, is claiming the airport receives 60 to 100 per cent more revenue from landing charges than any of its Australian counterparts, and twice as much revenue per passenger.

However, figures from the same independent study commissioned by Air NZ show Auckland's combined landing and international passenger departure fee income from three common kinds of aircraft to be lower than that of Christchurch.

But bad news for the airlines is good news for shareholders of the airport, including four of the Auckland region's councils which own 61 per cent of the company.

The higher charges will boost the airport's revenue by almost $10 million over the next three years, according to CS First Boston.

In a report to its clients, the broking firm says the airport's concurrent decision to lift its international departure fee by $2 a passenger to $22 will raise $3.8 million more a year.

That has caused CS First Boston to raise its earnings forecast by $6.5 million (11 per cent) for the year to June 2001 and by $8.7 million (13 per cent) for the June 2002 year. The increases amount to about 30c per share.

The airport reports its June 2000 result on September 1.

Airlines, represented by BARNZ, have been negotiating with the airport on landing charges since last November.

At dispute between the parties are questions such as which assets should be included in the valuation of the part of the airport's asset base used as the starting point for it to set its charges. The major imponderable is the fair value to be ascribed to land.

CS First Boston said it had expected the airport to be able to justify a 10 per cent to 15 per cent increase in charges with the increase staggered over the next three to five years.

The broker concludes that given the airport's spending on its runway - the airport is two years into a five-year $140 million capital expenditure programme - and on public areas and amenities, a challenge by the airlines "may not bear much fruit."