"New Zealand airport owner hits airlines on two sides"

Tuesday, March 25, 2003

Airport owner hits airlines on two sides
By CHRIS DANIELS
The New Zealand Herald


Infratil, two-thirds owner of Wellington Airport, has issued a detailed
criticism of Air New Zealand's plans to join forces with Qantas, and offered
a spirited defence of the hefty rise in the fees it charges airlines.

In its latest market update, Infratil describes Wellington International
Airport, which it co-owns with the city council, as a "relatively low-risk
business".

"However, it is not riskless and cannot be satisfied with the 3 per cent
returns it has been achieving since the substantive terminal investment in
1999."

It now wanted a 10 per cent after-tax annual return on its aeronautical
business over the next five years.

This year's 77.7 per cent fee rise has enraged the airlines, particularly
Air New Zealand, which is the airport's biggest user.

Board of Airline Representatives executive director Stewart Milne said
recently that the increase was evidence of an airport company "out of
control".

It had set its fees in complete disregard for the recent Commerce Commission
report into airfield pricing.

Yesterday Infratil also outlined more of its reasons for opposing a proposed
alliance between Air New Zealand and Qantas.

Infratil says the alliance would be anti-competitive.

"An important part of Air New Zealand's case for the alliance with Qantas is
the assertion that without an alliance, one of the airlines will withdraw
from the New Zealand domestic market and Air NZ will be obliged to reduce
its international services," says Infratil.

"Both developments are unlikely. If the alliance progresses it will
adversely impact air travel within, into and from New Zealand."

Since the Government had already invested $850 million in Air New Zealand
and declared the company to be crucial to the nation's wellbeing, it was not
difficult to expect Air New Zealand's interests to be placed ahead of the
interests of airline users, it said.

New Zealand could support more than one airline operating domestically,
especially with the stimulation of the market that resulted from the recent
introduction of cheap fares.

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