Qantas and Air New Zealand, the two largest customers of Auckland International Airport Limited (AIAL), have joined forces to oppose the scale and cost of Auckland Airport’s planned redevelopment and are urging a reevaluation of the project. AIAL had announced earlier this year that it would invest $3.9 billion in the initial phase of the airport redevelopment over the next 5-6 years, with the expenses to be borne by airport users.
The airlines have provided AIAL with information regarding the impact on their networks, supported by independent economic analysis. The findings suggest that the airport’s redevelopment plans would result in increased airport charges, potentially rendering air travel unaffordable for a significant number of passengers. This would have adverse effects on both airlines, including Qantas’ subsidiary Jetstar.
AIAL recently disclosed its increased aeronautical charges, revealing that indicative per-passenger charges on international routes are expected to roughly double by the end of the five-year pricing period, while domestic charges are projected to more than double. Given AIAL’s intention to spend billions more, further significant increases are anticipated in the subsequent pricing period, although AIAL has not provided specific details on the extent of these increases.
The airlines argue that airports should focus on building assets that meet the needs of their customers, and they disagree with the scale and cost of AIAL’s current plan. It is also worth noting that AIAL may have only disclosed the first phase of the redevelopment plan, and the costs are expected to escalate. One analyst estimates that the overall costs for phases one and two of AIAL’s four-phase master plan will likely reach $6 billion, indicating that there will be substantial additional costs in the future.
Air New Zealand CEO Greg Foran emphasizes the necessity of investment in Auckland Airport but criticizes the enormous expenditure over a short period, which is expected to provide minimal additional capacity. He highlights that the result will be increased costs for all airport users, including the aviation and tourism industries, the overall economy, and Air New Zealand’s passengers.
Qantas CEO Alan Joyce acknowledges the need for investment but argues that AIAL’s proposal goes beyond what is necessary or affordable. He suggests that the initial phase of the redevelopment could be accomplished for significantly less than $3.9 billion, and he anticipates that the final cost will likely exceed this amount due to common cost overruns in large infrastructure projects.
Industry analysis indicates that airfares are projected to decrease in the long term as global capacity constraints ease. However, increasing cost pressures on the airline industry limit how much fares can fall.
Both airlines are urging Auckland Airport to reconsider its approach to the redevelopment project in light of these concerns.