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International Departure Fee to go under pricing proposal

19 Aug 2011

International Departure Fee to go under Wellington Airport’s pricing proposal. Wellington Airport has proposed removing the International Departure Fee in its initial pricing proposal presented to airlines today. “Paying an additional fee on departure has long been a source of passenger frustration. Removing the fee will raise the standard of the passenger experience to the level expected of a sophisticated central city airport,” said acting CEO John Howarth. “As part of our continuing efforts to make international travel more competitive and promote new routes and additional services to the Capital, Wellington Airport has proposed reducing international charges and incentivising new growth with a published discount structure available to all airlines.” “These initiatives are expected to generate more passengers travelling to more destinations, on more services, directly to and from Wellington.” Wellington Airport issued the pricing proposal to airlines today in the latest stage of a year long consultation process to determine the amount airlines will pay for using the airport’s facilities and infrastructure from 1 April 2012. The Airport Authorities Act prescribes the method and process to set the pricing levels known as aeronautical pricing. New prices are not set until the open and comprehensive process of consultation has been completed. The process enables prices to be set to allow Wellington City ratepayers and Infratil’s 16,000 shareholders to receive a fair return on funds invested. Over the next five years, Wellington Airport proposes to invest $67m in aeronautical assets and upgrades such as the expansion of terminal buildings to accommodate next generation aircraft, upgrading baggage handling systems, enhancing safety systems and airfield improvements. Under the proposal, airline charges for international services per passenger would reduce by around $7 over the five year period. Domestic charges per passenger would rise on average between $0.37 and $1.79 each year depending on the size of aircraft and the time of the flight. “Airport prices over the last nine years have decreased in real terms” said Mr Howarth. The average airport charges are proposed to rise each year by less than 70c per passenger per flight or $3.37 over the five year period in real terms. Total aeronautical revenue has been proposed to increase on average by $5.6m per year adjusted for inflation, which equates to a 5.6% increase in revenue per passenger per year. “Wellington Airport has a single runway which can accommodate 35 flights an hour in good weather,” Mr Howarth said. “That capacity is now being approached at peak times and even though the charge to land a small regional aircraft is around 20 times less than a domestic jet carrying 180 people, the slot each aircraft occupies is the same. The pricing proposal explores the potential to provide an incentive for smaller aircraft to operate during off peak times, freeing up the limited capacity for larger aircraft to accommodate growth.” If the proposal is implemented, the new structure would place Wellington Airport in the mid-range of Australasian airports in terms of cost per passenger and in between prices at Auckland and Christchurch airports. Given that Wellington Airport is a true central city airport, the close proximity to the CBD affects its land value and limits its capacity. The ability to deliver comparable prices to other airports and provide an enjoyable experience, demonstrates Wellington Airport’s value for money as the travel costs for passengers to and from the airport are comparatively low. The consultation timetable with airlines allows considerable time for ongoing discussion. Airlines have already received and provided feedback on Airport development plans, asset valuations and traffic forecasts which form the basis of this proposal. The next series of feedback from airlines on the proposed changes is due on 7 October. About Wellington Airport • Wellington Airport is a vitally important piece of national infrastructure providing a significant ongoing contribution to the region’s economy as well as delivering a return to the city and shareholders on the funds invested. • Wellington Airport is owned by Wellington City Ratepayers and Infratil’s 16,000 mainly New Zealand based shareholders. • In the year ended March 2011, the airport paid a $9m dividend to Wellington City Council which is the equivalent of $120 for each and every ratepayer. • Of New Zealand’s major airports, Wellington Airport is the most cost efficient. It provides a sophisticated experience for travellers and its close proximity to the CBD saves travellers time and money. • By 2030, passenger numbers are expected to double to 10 million. This growth will require a $450m investment in essential infrastructure. The increase will enable Wellington Airport to generate 11,500 new jobs in the region, sustaining 21,000 full time positions and increasing its contribution to the regional economy to $1.6b a year with flow-on impacts of $3.1b. • Over the five year pricing period, Wellington Airport will be investing $67m in the aeronautical assets required to accommodate anticipated growth and maintain the facility over the pricing period.
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