Auckland world's most profitable airport - expert

By NZPA

Tuesday 29th October 2002

Auckland International Airport is top of a list of international airports making huge profits, an airline industry adviser told the American Chamber of Commerce in Wellington today.

Professor Nawal Taneja, who has 30 years' experience advising major international airlines, said Auckland Airport was the top airport by operating profit-to-revenue ratio in 2002.

Auckland had beaten Airports Company of South Africa and Washington National Airport, he said, quoting a list published by the Travel Research Centre in London.

The airport company made a $71.5 million profit for the year to the end of June, up 21 percent on the previous year.

Auckland Airport's profit ratio was more than double that of the most profitable airline, European discount carrier Ryanair.

"Everybody connected to the airline industry has made money but airlines, and the biggest culprits of them all are airports," Prof Taneja said.

The monopoly held by airports could only be broken by government intervention.

In August the Commerce Commission recommended controls be introduced on the charges Auckland Airport imposed on airlines, estimating Auckland had earned around $4 million a year more than it should have.

Auckland Airport handles 70 percent of the country's passenger arrivals and departures.

Prof Taneja also said the business model of full-service airlines was faulted and discount carriers were increasingly drawing away passengers.

Major airlines were desperate to increase their passenger loads to pre-September 11 levels but were making big losses along the way.

"Let's just make it free and then there will be 100 percent load factor," Prof Taneja said.

Discount carriers such as Southwest Airlines in the United States and Ryanair were now worth far more than the full-service companies.

Prof Taneja believed the best way for full-service airlines to survive was to create low-cost subsidiaries, such as Air New Zealand discount arm, Freedom Air.

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