Auckland Airport cuts passenger fees

Auckland International Airport is cutting international passenger fees in the 2013 financial year but raising domestic travellers' charges. Photo / Thinkstock

Auckland International Airport, which is targeting Asian arrivals to stoke growth over the next decade, will trim its international passenger fees in the 2013 financial year, while hiking domestic travellers' charges as part of a new pricing schedule.

From the start of July, the country's biggest gateway will cut the average international passenger fee by 58 cents, or 2.8 per cent, to $21.55, and lift domestic charges $1.32, or 31 per cent, to $5.55, it said in a statement.

As part of its pricing restructure, the airport will drop international terminal service charges and domestic terminal lease charges for passenger processing, and introduce an international transit and transfer charge. Between 2014 and 2017, the airport will increase its annual charge at an annual two per cent pace to keep in line with inflation.

"This gives us greater alignment with airlines on the risk and reward of passenger volume growth," outgoing chief executive Simon Moutter said.

"If we didn't price appropriately, we risk not being able to keep up with growth in passenger numbers or the introduction of larger aircraft, which is absolutely essential for New Zealand's tourism and trade interests."

Last month, the Commerce Commission published a processes and issues paper seeking feedback on pricing at Wellington International Airport as it tests the effectiveness of information disclosure regulation in the airport sector.

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The airport expects slightly faster growth in international passenger numbers, which it forecasts to rise to 8.34 million by 2017 from 7.32 million in 2013, while transit numbers would increase to 578,000 from 514,000 over the same period. Domestic passenger numbers are forecast to rise to 7.31 million from 6.44 million.

Including the annual 2 per cent increase, that implies that revenue from international passenger fees will rise to $196 million by 2017 from $157.7 million in 2013 and domestic fee revenue will climb to $43.3 million from $35.7 million over the same period.

Aircraft landing charges will increase at a gradual pace over the period with increased volumes forecast implying the airport will attract $98.2 million in fees by 2017 from a forecast $80.1 million in 2013.

Moutter said the hike in domestic charges will go towards expanding capacity at the domestic terminal over the next 18 months to let it cope with bigger aircraft being used on local routes. The airport expects to spend $28 million on the upgrade, which will tide it over for a few extra years while it stitches up a plan for a new domestic terminal.

"The modifications will patch-up the existing domestic terminal for a few more years while we finalise our longer term plans for a new terminal," he said.

Over the five-year period, Auckland Airport flagged $244.9 million in capital expenditure for pricing, excluding a potential northern runway and new terminal.

The new pricing regime is expected to achieve an 8.48 per cent return on after tax return on aeronautical investment over the five-year period, and is in line with the regulator's 8.04 per cent weighted average cost of capital, the airport said.

- BUSINESS DESK