Wednesday, March 28, 2012

Dogfight breaks out over landing fees

 A dogfight has broken out between airports and airlines over landing fees, with accusations continuing to fly between affected parties. 

This week, it was revealed Dunedin International Airport had raised airline-user charges by 78%, prompting a scathing attack from Air New Zealand Australasia operations general manager Glen Sowry. 

Asked to respond to Mr Sowry's allegations that the increase was excessive and would lead to fewer people flying to and from Dunedin, airport chief executive John McCall referred comment to the New Zealand Airports Association. 

Association chief executive Kevin Ward said even if the $3-$4 increase per passenger from Air New Zealand on all Dunedin flights was all because of airport charges, it was a "very small proportion of the airfare".
"The increase is less than 1%, and the landing-fee component of airline total costs is small." 

Air New Zealand had been paying the increased landing fees into Dunedin since December 1, and only raised the issue as part of a price-control campaign aimed at the country's airports. 

"Price control is attractive for the dominant airline, but very bad for New Zealand overall," he said.

Price controls had been rejected by the Government, and a disclosure system was put in place for the three major airports: Auckland, Wellington and Christchurch. 

That system would be reviewed by the Commerce Commission during the next few years, he said.

"The real issue for New Zealand air travellers is the cost of flights to centres like Dunedin, Napier, Nelson, New Plymouth, and so on, where there is no choice for passengers. People understand, through their ticket prices, where the monopoly profits are being made," Mr Ward said. 

However, the Board of Airline Representatives NZ Inc executive director John Beckett said the Dunedin decision was a "spread of bad monopoly practices from the international airports to the other secondary airports". 

"It seems [Dunedin airport] has pushed it very hard ... it is a bad situation ... Christchurch and Dunedin both need good air services and Dunedin is not going to help itself by overpricing." 

While the country's three largest airports were subject to information-disclosure regulations, secondary airports, such as Dunedin and Queenstown, were "an area of neglect, a wild west". 

The airlines' lobby group did not want airports, as monopolies, to "price as they see fit", and was calling for price-control measures on the three largest airports, which "would have a salutary effect on other airports".
"New Zealand does have control on the prices of gas pipelines, electricity lines, and on Transpower, and the monopoly missing out on price controls is airports." 

A spokeswoman for Prime Minister John Key said the Government was aware of the situation and awaited with interest a report from the Commerce Commission on airports' information disclosures. 

Queenstown Airport chief executive Scott Paterson confirmed it was in the middle of negotiations with airlines over landing fees. 

Landing fees were last increased in 2004 and new fees were expected to come into force on July 1, he said.
From tomorrow, Air New Zealand fares to and from Dunedin will rise by up to $4. 

Mr Sowry said the increase made Dunedin the second-most expensive airport to land an Air New Zealand plane in the country, after Wellington.

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