(Bloomberg) -- New Zealand’s busiest airport plans to double the fees it charges airlines over the next four years as it funds NZ$5 billion ($3 billion) of terminal and other infrastructure improvements.
Auckland International Airport’s aeronautical charges are set for a four-year period commencing July 1 and ending in 2027, the company said Thursday. The increase is part of a regulated procedure and is subject to review by the Commerce Commission.
Auckland Airport’s planned infrastructure investment during that period includes developing a new domestic terminal, to be integrated into the international terminal. The charge increases meet about half of those costs, with the company using debt and potentially new equity to meet the full cost.
“We don’t think any travelers would say we are making the move to upgrade the airport too soon,” Chief Executive Officer Carrie Hurihanganui said. “We know travelers are fed up with the domestic travel experience — they’ve told us that clearly. The pandemic meant we had to put much of this investment on hold and we are now in catch-up mode.”
Auckland’s prices are lower than comparable airports in the region, Hurihanganui added.
The charge for a domestic jet will rise progressively to NZ$15.45 per passenger by 2027 from NZ$6.75 currently, the company said. The cost to land an international jet will rise to NZ$46.10 by 2027 from NZ$23.40.
“These changes have not been introduced lightly, particularly in the current economic environment,” Hurihanganui said. “We are very mindful of cost to our airline partners and ultimately travelers.”
Air New Zealand and Qantas Airways, the two biggest operators at the terminal, called on the airport to reconsider its approach. They oppose the scale of the redevelopment and warned that the price rises will put pressure on the cost of travel, according to a joint statement.
“Airlines accept that investment is needed, but what Auckland Airport is proposing goes far beyond what is needed or affordable,” Qantas Chief Executive Officer Alan Joyce said.
The overall price structure targets an after-tax return of 8.7% a year, which is consistent with Commerce Commission guidelines, the company said.
Auckland Airport shares were little changed at NZ$8.57 at 11:30 a.m. in Wellington.
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