In a joint statement, the leading airlines Qantas and Air New Zealand strongly opposed the exorbitant scale and cost of Auckland Airport’s planned redevelopment. Both airlines are urging an urgent reassessment of the plan, citing concerns about the significant increase in airport charges that would burden travellers and negatively impact the tourism and trade sectors.
Auckland International Airport Limited (AIAL) announced earlier this year its intention to invest a staggering $3.9 billion in the initial phase of the airport’s redevelopment over the next 5-6 years. The burden of funding this redevelopment will fall on airport users, which has raised alarm bells for Qantas and Air New Zealand.
Backed by independent economic analysis, the airlines have presented AIAL with comprehensive details regarding the network impact of the airport’s redevelopment. The study predicts a substantial surge in airport charges, potentially rendering air travel unaffordable for many travellers. This outcome would affect Qantas, Air New Zealand, and their Jetstar subsidiary.
AIAL has responded to these concerns by disclosing their increased aeronautical charges. According to their disclosure, per-passenger charges on international routes are expected to nearly double by the end of the five-year pricing period, with domestic orders more than doubling. Given the airport’s intention to spend billions more, it is likely that further significant increases will follow in subsequent pricing periods.
The airlines argue that airports should prioritize building assets that cater to the needs of their customers, and they firmly disagree with the scale and cost of AIAL’s current plan. It is worth noting that AIAL may have only unveiled the first phase of their redevelopment plan, and expenses are expected to continue climbing. One analyst estimates that the overall costs for phases one and two of AIAL’s four-phase master plan could reach a staggering $6 billion, indicating even more financial burden in the future.
Air New Zealand Chief Executive Greg Foran emphasized the necessity of investment in Auckland Airport but expressed concern about the enormous spending over a short period that adds little capacity. He stated, “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.”
Qantas Chief Executive Alan Joyce acknowledged the need for investment but believes that AIAL’s proposal goes beyond what is necessary or affordable. Based on Qantas’ experience, he suggests that the initial phase of the redevelopment could be delivered for significantly less than $3.9 billion, considering the common occurrence of cost overruns in large infrastructure projects.
Industry analysis indicates that airfare prices are expected to decline long term as global capacity constraints ease. However, the escalating cost pressures the airline industry faces limit how much airfares can fall.
Regarding these concerns, both airlines call Auckland Airport to reconsider its approach. They propose several solutions, including pausing major growth programs and the associated projects until a more affordable plan can be developed. Additionally, they suggest utilizing some of the profits generated from other services, such as parking and retail, to contribute to the project’s funding. Moreover, they emphasize the importance of minimizing the impact of infrastructure costs to ensure that passengers and airline users can continue to afford air travel.
How Auckland Airport will respond to the united front presented by Qantas and Air New Zealand remains to be seen. However, the implications of the airport’s redevelopment plan and the subsequent increase in charges have raised concerns about the affordability of air travel for many travellers. Considering the airlines’ recommendations, a recalibration of the plan may provide a more sustainable and beneficial outcome for all stakeholders involved.
Written by: Anne Keam
