A row has erupted between Auckland Airport and airlines over the airport’s decision to help fund its $3.9 billion NZD redevelopment by raising airline charges.
Qantas and Air New Zealand have come out against the price rises, which will see charges for domestic jet travel to and from Auckland go from NZ$6.75 to $15.45 by FY27, regional airline charges go from NZ$4.40 to $10.70 by FY27, and international charges go from NZ$23.40 to $46.10 by FY27. Revenue raised will go towards the airport’s expansion program, which includes conversion of the international terminal to handle domestic flights, replacing the ageing domestic terminal.
Auckland Airport Chief Executive Carrie Hurihanganui said the changes are necessary and have been made following consultation with airlines.
“These changes have not been introduced lightly, particularly in the current economic environment. We are very mindful of cost to our airline partners and ultimately travellers. That’s why we have been working hard to deliver a pragmatic and affordable solution while responding to airline requests for changes as much as possible,” she said.
“At the same time, we’ve considered what we need to invest to ensure Auckland Airport’s infrastructure is at an appropriate standard, capable of delivering a good customer experience for expected passenger numbers and is resilient for the future. That’s our role. Doing nothing is not an option.”
Qantas and Air New Zealand, however, are saying that the increased charges could make air travel unaffordable for a “significant number of travellers” including Jetstar passengers, and are calling for the airport to pause major growth programs and enabling projects while a more affordable plan is developed.
“Airlines accept that investment is needed, but what [Auckland Airport] is proposing goes far beyond what is needed or affordable,” said Qantas CEO Alan Joyce.
“Based on Qantas’ experience, the necessary first phase of this redevelopment could be delivered for significantly less than $3.9 billion, and we’re conscious that the final number will probably be higher, with cost overruns common to most large infrastructure projects.”
Air New Zealand Chief Executive Greg Foran labelled the plan as “an enormous spend over a short period of time that adds almost no additional capacity”.
“All it is expected to result in is more costs for everyone who uses, relies on, or passes through the airport, including the aviation industry, the tourism industry, the whole economy, and Air New Zealand’s passengers,” he said.
In response, an Auckland Airport spokesperson said independent studies have refuted the idea that the infrastructure investment will hurt the travel market.
“Airlines have suggested that we keep travellers in the existing Domestic Terminal for longer. Travellers don’t want that, and it’s not the right outcome. The terminal is 57 years old and needs replacing. It will not get any easier or cheaper,” the spokesperson said.
“The fact is airlines have long enjoyed very low domestic charges that fairly reflect the age and condition of the domestic terminal, and it’s in their financial interest to hang on to that for as long as possible. We get it.”
The spokesperson went on to say that the domestic terminal was “under significant capacity strain in 2019”, and that its replacement cannot be delayed any longer.
“Our solution is affordable in the context of comparable airports and will support travel and tourism by greatly improving customer experience and capacity. In the long term, we all know new capacity puts downward pressure on airfares,” they said.
“Our charges only make up a small portion of an air ticket – around 3-5% of an airfare in FY24 – and are comparable with other major airports in the region.
“Over the last ten years we developed 21 designs to replace the domestic terminal. If there was a real, buildable alternative to the new integrated terminal, it would have surfaced during our years of airline consultation. It has not surfaced.”
Slated for completion in 2028-29, the project will see the existing international terminal have new floor space added across two levels via an expansion at the eastern end of the building, with key upgrades also being carried out on the airfield infrastructure including pavement and utilities.
Smaller regional flights using turboprop aircraft will continue to operate from the old domestic terminal until a better solution is found.