Air New Zealand CEO Greg Foran has doubled down on the airline’s response to an increase in fees being charged by Auckland International Airport.

In an exclusive interview with Travel Weekly Australia, Foran said New Zealand and Australia operate differently to most places in the world, not having any sort of regulation controlling what an airport can charge airlines, something he finds “completely bizarre”.

As I’ve got to learn about this industry, New Zealand and Australia are a bit unique,” he said.

New Zealand’s national carrier recently joined forces with Qantas, slamming Auckland International Airport’s fee increases as the airport begins a multi-million dollar upgrade.

Auckland Airport’s future plans (Supplied)

Foran says while Air NZ and Qantas have no issue with the upgrade itself, the leaders of both airlines question the size of the changes, and who is paying for them.

Air NZ says the initial phase of development at Auckland International Airport will mean that landing charges will roughly double on international routes by the end of 2027 and more than double on domestic.

“That’s just the tip of the iceberg. Auckland Airport says there are four phases to this development, and it has only announced the first two,” the airline said.

“In the USA, there’s a relationship that exists where the FAA acts as a sort of middle body between the airport and the airlines.

An image that has airport geeks very excited (Supplied)

“That is different from what we experience in Australia and New Zealand.”

“Here, effectively the airports can determine how much they want to spend and what they want to spend it on.

“And they tell us what that cost is going to be they develop the product, the day the product is delivered such as a new terminal, then we start paying the rates, and they’re guaranteed a return,” Foran said.

“We can sit here and say, well, we actually don’t think that you need to make the roads that wide, or we don’t think you need to make the terminal that large, but at the end of the day, the airport can effectively do what it wants to do.”

“And they do, and we live with the cost, which invariably ends up in a ticket price, in some form or fashion,” he said.

I just find that completely bizarre, to be honest with you.

Foran says Australia and New Zealand need some sort of regulator to monitor airport fees.

“I don’t think it should be the ability of just a single party to say, this is what we think it’s appropriate, and you guys live with it,” Foran said.

“If you need to fix a runway, we absolutely agree with that. We don’t want planes landing when the runway isn’t fixed.

“But have you considered all options? If one of the options is quick-drying cement that allows you to reduce the cost, and that has a flow-on effect to some other parts of the business.

“Can we at least have a discussion about that? As opposed to No, we’ve looked at that thank you very much, this is what we’re going to do,” he said.

So I find the whole construct to be quite difficult.

Auckland Airport recently appointed former Air NZ Chief Operating Officer and member of Foran’s team, Carrie Hurihanganui as its new CEO.

When announcing the new fees, Hurihanganui said the increase in airline charges reflected the higher cost of capital in the current economic environment.

“Travel is back, and the recovery is taking place more quickly than anyone expected. Now is the time for investment in Auckland Airport if we are to deliver the resilience and customer experience travellers want and the gateway New Zealand needs for the future,” Hurihanganui said.

Our domestic terminal is 57 years old and needs replacing. We know travellers are fed up with the domestic travel experience – they’ve told us that clearly.

We don’t think any travellers would say we are making the move to upgrade the airport too soon.” 

“Other key aeronautical infrastructure also needs replacing. The pandemic meant we had to put much of this investment on hold and we are now in catch-up mode,” she said.

At what cost?

Domestic jet travel (Auckland to/from main centres):

• Airline domestic jet charges will average $11.85 over a five-year period
• Charges will initially rise $3.50 from $6.75 to $10.25 – lower than current charges at Wellington
• Airport ($15.20), and at Christchurch Airport ($14.60)
• Prices will then reach $15.45 by FY27

Regional airline charges:

• Airline regional charges will average $8.15 over a five-year period
• Regional charges will initially increase by $2.70 in July from $4.40 to $7.10 – this is $3 to $4 cheaper than comparable current charges at Wellington Airport ($11.20) and Christchurch Airport ($10)
• Regional charges will reach $10.70 by FY27

International charges:

• Airline international charges will average $37.25 over a five-year period
• International charges will initially increase by $9.40 from $23.40 to $32.80 – this is lower than current published equivalent charges at other major international airports in the region including Sydney ($42.20), Melbourne ($35.90) and Brisbane ($56.70)
• International charges will reach $46.10 by FY27

A recent ruling in the UK blocked similar increases at London Heathrow. (iStocK)

The battle between Auckland Airport and Air New Zealand and Qantas is similar to one which has been taking place between Heathrow Airport, British Airways and Virgin Atlantic.

In March, Britain’s aviation regulator the Civil Aviation Authority (CAA) told Heathrow Airport it would have to lower its airline fees.

The CAA said it had to lower what it charges airlines per passenger from 31.57 pounds to 27.49 pounds.

The owners of Heathrow, Qatar Investment Authority and Ferrovial had intended to increase the fees to 40 pounds.

Greg Foran also spoke about Air NZ’s determination to dominate New York flights.