17 Jul 2007
International passengers grew at 10.6% pcp in June in the face of a 1% fall in capacity. Airline load factor was up 8 points on last year to 72.5%. At the end of the first quarter, year to date growth in international passengers now stands at 8%, with seats down 3%. In what is usually one of the slowest months of the year, this is a sign of robust but constrained demand, with passengers growing strongly despite withdrawal of seats and significant increases in air fares.
Despite strong demand, domestic passenger volumes remain far more subdued with growth of 2% in June on a 5% fall in seats. Domestic load factor in June was up 5 points on last
year at 75%. Year to date, domestic passengers were down 0.7% on a 4.7% fall in seats. Stronger growth is unlikely to be seen unless there is a significant change to the make-up of the domestic airline market.
Terminal developments are continuing with construction now commenced on the new landside duty free store, and new foreign exchange outlets also scheduled for construction in
coming months. Airside works for the first of the new additional aerobridges are proceeding to timetable and budget.
In June, Wellington Airport announced its increase in landing charges of 2.85% per annum for the next five years (or around 30 cents for jet passengers). The international departure fee will remain unchanged. At the same time, Wellington Airport confirmed its commitment to over $100m in new investment. Wellington Airport considers this outcome very positive for travellers and for airlines who wish to grow the Wellington market.
This has not prevented some airline lobbyists from taking advantage of the circumstances to generate a climate of dispute. BARNZ has sought a Commerce Commission Inquiry, a matter which WIAL takes extremely seriously, having been through an inquiry and a subsequent binding arbitration that completed only four years ago. WIAL is satisfied that it has conducted itself properly in setting its prices and is cogniscant of the risk of regulatory control if it does not do so. It is also clear to WIAL that some airline lobbyists see much more at stake than very small increases in landing charges. In WIAL's view, the review of the Commerce Act has heightened ambitions of BARNZ and Air New Zealand to secure a more interventionist regulatory environment that will provide the dominant airline with an opportunity to veto, stifle and delay new investment that Air New Zealand has branded "unnecessary". Presumably in WIAL's case this would include runway end safety areas that allow all airlines to operate in accordance with safety standards and without payload restrictions, as well as terminal expansions that allow for growth in the international market. New investment is generally more favoured by airlines wishing to grow in the NZ market and secure access to facilities. WIAL has made a detailed submission to the Ministry of Economic Development outlining its views on such proposals.
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