Air New Zealand to issue proceedings against Wellington International Airport

Air New Zealand has today confirmed that it plans to issue proceedings in the High Court seeking a judicial review of the decision by the Wellington International Airport (WIAL) to increase its airline charges by at least 78%, including a 27% increase in landing charges and a 312% increase in  terminal charges.

In view of the strong recommendation from the Commerce Commission last year, Air New Zealand has said it remains optimistic that as a consequence of the very substantial increase proposed, the Minister of Commerce will introduce a  price control regime. This is necessary to create a constraint on monopoly airport price increases in the future as the current regulations have proved ineffective.

The increase, to be imposed on all airlines, will result in Boeing 737 charges at Wellington being substantially higher than the average of all comparable airports in Australasia and (domestically) more than double those applied by Auckland and Christchurch airports.

This increase, based on historic passenger numbers, would deliver to WIAL its desired 15% (pre-tax) return on capital. In addition, stimulation of passenger traffic through Wellington (such as the 16% increase in passenger numbers as a direct consequence of Air New Zealand's Express Class service) will result in further monopoly profit for WIAL.

Air New Zealand alleges that the WIAL failed to consult properly in good faith and with an open mind and that the increases imposed were essentially pre-determined, despite some 19 months discussion.

Air New Zealand also advises that the Company is in receipt of proceedings issued by WIAL in the High Court today to enforce payment of the amount under dispute. The proceedings will be defended and the airline expects both cases will be heard jointly by the High Court.