Auckland Airport cuts international landing fees

Monday 6th July 2009

Auckland International Airport, the country’s biggest gateway, will cut international landing fees by 5% and abandon plans to raise domestic charges as the global downturn in demand for air travel erodes airline profits.

Shares of Auckland Airport fell 2.6% to $1.52, the lowest in almost six years. The airport company will proceed with plans to raise its international passenger service charge to $13.50 from $13, saying the increase in the PSC will make up for the reduced revenue from landing charges.

“Today’s announcement is a relatively small measure in the overall strategy,” said spokesman Richard Llewellyn. “It’s a reasonably tough environment” and Auckland Airport will be reigning in its non-essential spending to try and reduce the burden being borne by its customers, he said.

The global economic slump is eroding earnings for airlines, which are being forced to cut capacity as ticket sales fall. Air New Zealand’s long-haul passenger volumes tumbled 19% in May, led by routes through Asia, Japan and the UK Rival Qantas Airways last month slashed its order for Boeing Co.’s Dreamliner aircraft, citing an operating environment that had “changed dramatically” since it first placed the order in 2005.

The airport will review its pricing arrangements in six months, it said. New Zealand has stepped up efforts to lure passengers from Australia, the biggest source of visitors, as demand from other markets abates.

Australian tourists have been targeted by a joint $5 million marketing campaign by the government and Air New Zealand, which Prime Minister John Key estimates may generate some $65 million of economic benefits.

Short-term visitors to New Zealand rose 1% in May from the same month of 2008, as an increase in Australian tourists offset a slump in tourism out of Asia, according to government data.

Auckland Airport’s credit rating was cut to A- from A by Standard & Poor’s in May, reflecting the tough climate in the aviation sector and dwindling passenger numbers. The airport had predicted its full-year profit would be at the low end of its $100-110 million forecast range. The gateway will give its earnings guidance for 2010 when its releases its 2009 results on August 28.

Businesswire.co.nz

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