Qantas and Air New Zealand, the two largest customers of Auckland International Airport Limited (AIAL), have united in their opposition to the scale and cost of Auckland Airport's planned redevelopment and are calling for an urgent rethink of the plan.
In a joint statement, Qantas and Air New Zealand noted that AIAL announced in March this year that it would spend US$3.9 billion on the initial phase of the airport redevelopment over the next 5-6 years — and the cost of that redevelopment will be paid for by airport users.
L-R: Greg Foran, chief executive of Air New Zealand and Alan Joyce, chief executive of Qantas. (Photo: Air New Zealand)
Air New Zealand and Qantas said they have each provided AIAL with details of their network impact, underpinned by independent economic analysis.
"This shows the cost of the Airport's planned redevelopment is predicted to increase airport charges to the point that air travel may become unaffordable for a significant number of travellers," the statement said, adding that this would impact both airlines, including Qantas' subsidiary, Jetstar.
The statement noted that AIAL had made a market disclosure and published its increased aeronautical charges.
"Indicative per passenger charges will roughly double on international routes by the end of this five-year pricing period (FY27) and more than double on domestic," Qantas and Air New Zealand said.
"Given AIAL's intention to spend billions more, there will have to be further significant increases to follow in the next pricing period, the extent of which AIAL has remained silent," it added.
The joint statement pointed out that airports should be building their assets to fulfil the needs of their customers and that the "two major airline customers don't agree with the scale and cost of the current plan."
It added that it's also important to note that AIAL may have only released the first phase of the redevelopment plan, and it appears that the costs will keep climbing.
Qantas and Air New Zealand said one analyst estimates the overall costs for phases one and two of AIAL's four-phase master plan will likely be US$6 billion.
"We all agree that some investment in Auckland Airport is necessary," said Greg Foran, chief executive at Air New Zealand. "However, this is an enormous spend over a short period of time that adds almost no additional capacity."
"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," Foran added.
Alan Joyce, chief executive at Qantas, also echoed Foran's sentiment.
"Airlines accept that investment is needed, but what AIAL is proposing goes far beyond what is needed or affordable," Joyce said.
"Based on Qantas' experience, the necessary first phase of this redevelopment could be delivered for significantly less than US$3.9 billion, and we're conscious that the final number will probably be higher, with cost overruns common to most large infrastructure projects," Joyce said.
The joint statement noted that industry analysis shows the longer-term pricing outlook for airfares is downwards as capacity constraints ease globally. However, cost pressures for the airline industry are increasing, limiting how far airfares can fall.
"Both airlines are calling on Auckland Airport to reconsider its approach," the statement said.
It added that AIAL should invest efficiently and affordably in its infrastructure, building an airport that is useful and efficient for the airlines that use it.
With this, Air New Zealand and Qantas suggest a pause on major growth programmes and their enabling projects while an affordable plan is developed, either through reducing cost or exploring a more workable funding and pricing model, investing some of the profits AIAL earns from other services like parking and retail to pay for some of the projects.
Qantas and Air New Zealand are also seeking that AIAL prioritise reducing the impact of the cost of infrastructure so passengers and those who use airline services can afford to keep flying.
