Auckland airport raises charges for airlines, international passengers

WELLINGTON, New Zealand (Reuters) -- The announcement by Auckland International Airport Tuesday that it will raise landing and development charges prompted immediate complaints from airlines.

The airport said landing charges would rise 8.5 percent on September 1, followed by further increases of 5 percent on September 1 in both 2001 and 2002.

The development charge, payable by all departing adult international passengers, would increase to NZ$22 (US$10) from NZ$20, effective October 1.

"AIAL is continuing an extensive five-year capital expenditure program involving the total rehabilitation of the runway, taxiways and aprons. The estimated cost of this major program which has been under way now for two years is some NZ$140 million (US$61.9 million)," the company said in a statement.

On the passenger charge, it added: "This increase takes account of a number of factors including the recent provision of improved and extended public areas and amenities."

Analysts said the fee increases would raise the company's profits by around NZ$3 million (US$1.3 million) to NZ$4 million (US$1.77 million) a year.

"The beauty of this is that it's very much a fixed-cost business so that a lot of that will drop through to the bottom line. It basically won't have additional costs," said Cavill White Securities analyst John Cairns.

The Board of Airline Representatives New Zealand -- which represents airlines using the airport -- said there was strong opposition to the increase among members.

"Auckland is already a very expensive airport for airlines and passengers in comparison to other Australian airports and to further increase landing and passenger charges smacks of pure monopolistic behavior," executive director Stewart Milne said in a statement.

Airlines had talked down the level of increase but believed AIAL's current charges were already too high, he said.

"Auckland International Airport Ltd is a very profitable company which is experiencing considerable growth in passenger numbers, aircraft movements and revenues."

Milne said a challenge to the hikes would be discussed at a meeting of airlines on Wednesday.

Analysts said the increases would boost revenues by NZ$6 million (US$2.6 million) to NZ$7 million (US$3.1 million), with much of that flowing through to profits as costs were fixed.

They were not surprised that airlines, whose own profits are under pressure from rising fuel costs, were angered by the rise but said they expected the increase would survive a challenge.

"It's still cheaper than Sydney. It's not going to deter Auckland's competitive advantage in the region and it's locked in for three years so they know where the cost growth is for them," said Deutsche Securities analyst Warren Doak.

Auckland airport is scheduled to report its results for the year to June 30, 2000, on September 1. A Barra Global Estimates survey of analysts found an average net profit after tax forecast of NZ$50 million (US$22.1 million), versus NZ$42 (US$18.6 million) the previous year.

The company is 25.8 percent owned by Auckland City Council, 9.6 percent by Manukau City Council and 7.1 percent by Singapore's Changi Airport Enterprises.

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