"Dismay over New Zealand airport landing fees proposal"

Friday, June 28, 2002

Dismay over airport landing fees proposal
United Kingdom - The London Financial Times


Wellington International Airport Ltd (WIAL) is the latest major airport
company to upset large users with the scale of landing fee charges.

An interim increase of 10 per cent will take effect for large users on
July 1, and for smaller airlines in August, while they haggle over a
final figure. Air New Zealand and Qantas are the major users.

WIAL's majority owner, Infratil NZ, earlier indicated it was seeking a
66% increase in the fee covering the airfield and terminal.

The Board of Airline Representatives (BARNZ) said it was astounded and
dismayed that Infratil was pushing ahead with new charges ahead of a
Commerce Commission report to the Government on airfield pricing, due by
June 30. It also claimed Infratil had breached a confidentiality
agreement.

Yesterday, BARNZ executive director Stewart Milne said the level of the
interim charge increase was acceptable but"we still have a difference
over what they're seeking as a final".

He said that even now, Wellington was the most expensive airport when
landing fee, terminal, and departure charges were included.

At Wellington the charge for a domestic Boeing 737 is $778, compared
with $624 in Auckland, and $626 in Christchurch. For an international
flight, the fees are $2765, $2261, and $2095 respectively.

Major airlines were put out by Auckland's increase in landing fees last
year, which nearly ended in court action. They also have an
ongoing"strong disagreement", dating back to January 2001, with
Christchurch over its pricing model of including forward capital
expenditure in the current landing charges.

Unless the Commerce Commission report makes criticism of this pre-
financing method, Mr Milne said the airlines would not have much option
but to continue paying the fee as its stands.

WIAL's chief executive, John Sheridan, would not speculate yesterday on
what the final fee increase might be, or what the company's rate of
return on its assets would be. The rate of return has been 3% in recent
times, with the company understood to be targeting a 10% return. This
would be higher than Christchurch and Auckland, with the company
justifying this because as a smaller airport it carries a higher risk
premium.

Wellington landing charges were last increased in 1997.

Infratil owns 66% of WIAL. Its shares rose against the trend yesterday,
up 2c at 183 after allowing for going ex a 3c dividend.


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