8 Jun 2023

'It starts getting put into ticket prices': Air NZ signals it will pass on increased airport charges

From Checkpoint, 5:28 pm on 8 June 2023
An Air NZ plane at Wellington International airport on February 20, 2020.

Photo: AFP

Air New Zealand says if Auckland Airport lifts its airline charges, customers will likely see an increase in ticket prices - despite the airline expecting to bring in larger profits this year. 

Auckland Airport looks set to progressively lift airline charges over the next five years, after a year-long price freeze.

Today Air NZ upgraded its forecast for the current financial year ending this month and now expects earnings before tax and big one-off costs to be no less than $580 million, up from the April forecast range of $510m - $560m.

But Air NZ chief executive Greg Foran told Checkpoint an increase in charges from Auckland Airport would impact ticket prices.

"We end up wearing it, along with other airlines, and I think then what happens is it starts getting put into ticket prices."

Whether or not the customer would foot the the whole bill, Foran said: "it depends". When pushed on this, he repeated an earlier point - that it was "a just competitive business with airlines".

"One of the things in the airline industry is, it's competitive so at the end of the day we need to maintain pricing parity and surety with our competitors out there so it ends up getting caught in the mix of things."

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Air New Zealand chief executive Greg Foran says the airline business is a competitive one. Photo: RNZ / Samuel Rillstone

Foran said if Air NZ was to reduce prices, its margins would be impacted.

It had been a good year financially for airlines, after a couple of years of losing money, he said.

Auckland Airport said airline domestic jet charges would increase 130 percent, reaching $15.45 per passenger by 2027.

International charges would nearly double to just over $46 per passenger, and domestic regional charges would increase 141 percent to $10.70 per passenger by 2027.

The increased airline charges will help fund the airport's $3.9 billion redevelopment plans.

"The reality is, we're very happy for some money to be spent at the airport and there's no doubt that we should spend some," Foran said.

"But you know, it's a bit like renovating a house, you've gotta make sure the cost is affordable, you just can't plough ahead and assume that you can do that because someone else is paying."

Earlier today Auckland Airport said airlines had benefited from "very low domestic charges" that reflected the age and condition of the domestic terminal.

"Major airlines are reporting very healthy or even record profits, with some committing to multibillion-dollar investment in their own fleet and airport hangars.

"We need to do the same to ensure travellers have a great experience when they travel through Auckland Airport."