The New Zealand airline has pleaded with the Government to get involved in the process and Commerce Minister Andrew Bayley has met Auckland Airport chief executive Carrie Hurihanganui (also formerly from Air NZ) to express his concern about rising charges.
Wallace says in the post the system isn’t working. Under that process, airports must consult but then can essentially set prices as they see fit to cover the cost of capital projects.
Spending on a new domestic jet terminal, which will be integrated with the international building, will cost close to $4 billion - including associated works. Air NZ has proposed a structure that it says will cost $1b less.
Wallace says the airport is keen to spend more on the project because it means it can charge “a lot more” for people to use it.
“The current system is clearly failing to keep airport over-investment in check. That’s why Qantas and Jetstar [along with other airlines] support the calls for urgent reform. We need better safeguards so that our customers and the broader New Zealand economy don’t pay the price,” he says.
Auckland Airport - which says airlines have previously agreed to the building work - has been contacted for its reaction to Wallace’s post.
Last week, Jetstar chief executive Stephanie Tully joined criticism of the airport’s plan.
“We agree the airport needs some work, but what’s proposed is completely overdone - and for Jetstar being a low-fares leader, it’s really important,” she said.
Qantas vies with Air New Zealand as being the biggest transtasman carrier, and has flights through Auckland to New York.
Today it announced it is putting a bigger plane on its Wellington-Brisbane service that will add more than 600 seats a week from later this year to meet growing demand for business and holiday travel.
Qantas’ low-cost carrier Jetstar has less than 20 per cent of the domestic market here. That is dominated by Air NZ, repeatedly criticised for high domestic fares which last month it said would rise further to boost yield as costs rise.
Fares charged by airlines that have a stranglehold on routes have been criticised by airports and passengers.
The airport responds
An airport spokesperson said the company couldn’t keep kicking the infrastructure investment can down the road.
‘‘To call the terminal we are building “the Taj Mahal” is simply nonsense. We have no interest in gold plating airport infrastructure and making travel unaffordable.’'
The spokesperson said it was investing in a fit-for-purpose integrated terminal, and essential airport infrastructure that ensures the airport kept running around the clock.
Work includes an expanded airfield, increased space for security screening to reduce queues, storm water upgrades and baggage systems.
‘‘Most importantly we are building a new domestic terminal that will increase capacity by 26 per cent enabling choice and competition for travellers – that’s what keeps airfares in check.’'
The spokesperson said the spending stacked up well when compared to other airports being built now. New York’s JFK Airport terminal 6, with fewer gates than our new domestic terminal, will cost $NZ6.8b – Auckland’s is $3.9b.
Auckland Airport’s charges make up a fraction of the cost of an average airfare – just 3 per cent to 5 per cent – with prices rising just $1.76 each year, the spokesperson said.
Wallace moved to Qantas in June last year after two years heading MediaWorks. That followed a near-20-year career at Air NZ, where he rose to being chief commercial officer and was in the running to be Christopher Luxon’s successor as chief executive.
Since he started at Qantas, that airline has been under sustained fire for what happened soon before his start date. Passengers and commentators have reacted angrily to fares and profit that soared following the pandemic, former chief executive Alan Joyce’s enormous pay, poor service, claims it offered flights that didn’t exist and being found to have unlawfully sacked workers. The airline has subsequently undergone a board and executive restructuring.
Last month, Qantas reported pre-tax profits fell by 13 per cent to A$1.25b (NZ$1.32b) for the first half of the year as fares and capacity continued to normalise.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
