Christchurch fees rise overcharging, say airlines

ALAN WOOD
Last updated 05:00 10/12/2012

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Airlines say they have made a huge effort to maintain services to Christchurch since the earthquakes, despite lower passenger volumes, and are extremely disappointed at an increase in airport landing charges.

Christchurch International Airport introduced a new set of charges on December 1 and they run through to 2017.

The Board of Airline Representatives (BARNZ) represents airlines including Emirates, Qantas, Jetstar, Air New Zealand, Air Pacific, Singapore Airlines and Virgin Australia.

The airlines generally feel the new charges are too high, particularly given the commitment to Canterbury and the airport after the quakes.

BARNZ executive director John Beckett said members viewed the landing charge levels as well above those justified by the Commerce Commission's guidelines.

"Astonishingly, the airport has set this level of charges in an attempt to make a 13.6 per cent return on capital before tax. The Commerce Commission guidelines give a return of 9 per cent before tax, which is overly generous," Beckett said.

However, Christchurch airport chief executive Jim Boult disputed the figure, saying the airport was making about a 7 per cent return on capital after tax. Even the before tax figure would be nowhere near the 13.6 per cent figure suggested by BARNZ, he said.

"I have no idea how he comes by his figures, but our position is the return on aeronautical assets averaged over the pricing period that we've set of four years is just over 7 per cent (after tax)," Boult said.

In response, Beckett said he was standing by the 13.6 per cent return on capital figure for the airport, with that figure provided by the airport as part of an "aero pricing strategy model" spreadsheet about the price increases. The new charges included increases of over 40 per cent for aircraft operated by international operators over the new pricing period, Beckett said. "For wide-bodied aircraft, this amounts to increases of over $2000 per movement."

Over the period through to 2017 the airport would be charging airlines $55 million more than was justified under the commission's approach. The overcharging would either fall upon the travellers in the form of increased airfares or on the airlines themselves, Beckett said.

The Commerce Commission was due to review the Christchurch International Airport pricing changes in the first quarter of 2013, with a report by September 2013. That followed reviews of Wellington and Auckland airports by the commission.

"It's up to the Government to then decide if what the Commerce Commission reveals is bad enough for the Government to do something about it," he said.

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