Air NZ Wants Its Own Terminal; Airline’s Plan to Beat Monopoly Airport Charges

AIR NEW Zealand is so fed up with monopoly airport charges that it wants to build its own passenger terminal at Auckland airport.

In a parting shot, chief executive Ralph Norris, who stepped down on Wednesday, said airport charges were a big issue for the airline, and having its own terminal was a realistic option.

“It may be in Air New Zealand’s interests for it to run its own terminal and shopping precinct and compete with Auckland Airport,” he told the Sunday Star-Times.

“The airport has ways and means of not allowing it to happen, but it probably could be achieved with Commerce Commission intervention.”

Norris said Air NZ could build a new terminal in partnership with a big property developer.

One aim would be to create an easier transfer between international and domestic services through a single Air NZ terminal.

“As a major international hub it would provide us with a lot more convenience,” said Norris.

There were overseas models for how the arrangement could work.

In Australia, for example, Qantas leases Terminal 3 for its own use at Sydney Airport, while Terminals 1 and 2 are owned and operated by the airport company for international and domestic traffic respectively.

The idea had been discussed at board level and floated with Auckland Airport, which Norris said was not well disposed to the proposal.

Air NZ has been campaigning for several years against what it sees as excessive airport charges.

In May 2003, Commerce Minister Lianne Dalziel decided against price controls on Auckland Airport, saying the benefits for air travellers were not sufficient to justify the cost.

Her decision followed a Commerce Commission report recommending price controls because Auckland Airport was earning excessive profits from its monopoly position.

The same year, Air NZ backed away from a confrontation with Wellington Airport over a 78% increase in landing charges. A settlement was reached on the eve of a court hearing after Air NZ had refused to pay the extra money.

Last week, Norris continued the fight, telling National Radio that airport profit margins in New Zealand were 75%, while the norm in Europe was closer to 35%.

Auckland Airport chief executive Don Huse said the company was an honest broker resolving competing airline interests.

Having “common use” terminals gave airlines more flexibility than single use terminals and avoided overbuilding. They also gave lower barriers to entry for airline competition.

“So what would possibly be the motivation for a single airline wanting its own facilities?” said Huse.

The airport had been negotiating with airlines for 12 months, he said, and a final outcome on pricing would not happen until September 2007.

“Only then can criticism be justifiably levelled at us.”

While there was naturally some tension on commercial issues, “that doesn’t affect our commitment to going through the process in good faith”.

Huse said the consultation process was clear and included court action as happened with Wellington airport, although “I certainly hope it doesn’t come to that … I think there’s a lot of crying wolf.”

——————–