Auckland International Airport Limited (AIAL)
8.2 AIAL was incorporated on 1 April 1988 and is the owner and operator of the Auckland International Airport. Its shares trade on the New Zealand and Australian stock exchanges. Substantial shareholders are Auckland City Council (25.8%), Manukau City Council (9.6%), and Colonial First State Investments (5.03%).272
Operational Details
8.3 Auckland International Airport is New Zealand's largest and busiest airport for passengers and for air freight (both domestic and international). Sixty per cent of passenger movements are international - much higher than at the other airports - accounting for 70% of New Zealand's international travellers. The airport operates 24 hours a day and is not subject to noise-based operational restrictions, although the Manukau City Council has required that AIAL offer to fund acoustic insulation to residents within the noise control boundary.
8.4 AIAL currently operates a single runway that can handle all current aircraft, including the largest international jets on maximum flight distances. Auckland's existing peak hour capacity is between 45 and 50 aircraft movements. Because of the number and broad mix of aircraft, the airport experiences a small amount of runway congestion for limited periods during some days. However, the Airport operates within total airport capacity levels in terms of runway (aircraft) movements. There is limited ability to extend the length of the current runway, as it is bounded by water at each end. A second runway is proposed for the future. When and if a second runway becomes viable, it would expand the airport's capacity and ease peak hour congestion. Before then, though, the existing runway is being rehabilitated and reconstructed.
8.5 Key operational statistics for the year ended 30 June 2001 are detailed in Table 7.
Table 7: Auckland International Airport Operational Statistics
| Size: | Land area (hectares) | 1,600 |
|---|
| Runway length (metres) | 3,635 |
| ICAO category273 | 9 |
| Aircraft Movements: | Domestic | 96,055 |
|---|
| International | 29,557 |
| Other (incl. GA) | 22,256 |
| Total | 147,868 |
| Passenger Numbers: | Domestic | 3,383,242 |
|---|
| International | 5,040,922 |
| Total | 8,424,164 |
| Freight Volumes: | Total (tonnes) | 186,954 |
|---|
| MCTOW Landed (tonnes)274 | 4,659,701 |
|---|
Activities Undertaken
8.6 AIAL is largely a facilities provider - providing land or buildings from which third parties operate their business. However, there are some exceptions. AIAL provides a rescue fire service, meteorological services, and international apron management at the Airport. The company also has one wholly-owned subsidiary, Waste Resources Limited, which operates the quarantine waste disposal facility at the airport. In addition, AIAL and its joint venture partner, Host Marriott, provide food and beverage services in the international terminal. AIAL has also in recent years invested in substantial commercial development.
8.7 AIAL's assets include the runway, aprons, three terminal buildings, a substantial retail precinct, car parking, and commercial and office buildings. Both major domestic airlines - Air New Zealand and the former Qantas New Zealand (Qantas NZ) - lease domestic terminal buildings from AIAL and handle the operation of the terminals themselves. The international terminal is shared by all the international airlines and contains a substantial shopping centre, with 55 shops operated as concessions by AIAL.275
8.8 Air traffic control at Auckland is currently handled by Airways Corporation of New Zealand Limited (Airways), which owns and maintains the navigation lighting and aids. Airways provide and bill the airlines directly for air traffic control services. AIAL does not provide ground handling services at the Airport, instead it is provided by third parties - principally by Air New Zealand and Ogden Aviation Services.
8.9 In total, AIAL owns a significant amount of land in and around the Airport, with 965 hectares relating to airfield activities. Around 262 hectares of the airfield land is held for future development of a second runway, the rest pertains to the current runway. AIAL already has a sizeable commercial precinct at the Airport, and has the opportunity to expand both its aeronautical and commercial operations in the future.
Airfield Activities
8.10 The activities undertaken by AIAL can be classified and grouped in terms of the three identified airport activities (defined in the Airport Authorities Amendment Act) and an additional grouping, other airport activities.
276 This Inquiry focuses only on airfield activities.
8.11 Airfield activities at Auckland International Airport, and those undertaken by AIAL, are as follows:
Table 8: Airfield Activities at Auckland International Airport
| Element of Activity | Undertaken by AIAL | Undertaken by Third Party | Assets owned by AIAL | Prices charged or revenue derived by AIAL |
|---|
| Airfields, runways, taxiways, and parking aprons for aircraft | Most. | Airways own and maintain runway and taxiway paint markings. | Land and land improvements (including drainage storm water, roads and other infrastructure - both airside and some apportionment for landside) associated with the main runway, taxiways, international apron, domestic apron, grassed areas and roads within the airfield or otherwise supporting it. | Aircraft landing charges.
Sundry income from hay sales. |
| Facilities and services for air traffic control | AIAL leases land to Airways. | Provided by Airways, who own the Control Tower building, as well as owning, operating and maintaining navigational assets. | Land on which Airways' Control Tower sits. | Rent from land leased to Airways. |
| Facilities and services for parking apron control | AIAL provides apron control service at the international terminal apron. | Air New Zealand and Eagle Air provide apron control at the domestic apron on behalf of AIAL. | Land and buildings for the International Apron Tower, together with land for the Domestic Apron. | Terminal Services Charge (TSC). |
| Airfield associated lighting | AIAL has apron lights only. | Airways owns cables and light fittings for main taxiway and runway. It operates and maintains this airfield lighting as well as AIAL's assets. | Cable ducts and light pots for entire airfield; cabling for light fittings for aprons and first taxiway. | Aircraft landing charges. |
| Services to maintain and repair airfields, runways, taxiways, and parking aprons for aircraft | All. | None. | Runway maintenance equipment. | Aircraft landing charges. |
| Rescue, fire, safety, and environmental hazard control services | All. | Airport Noise Committee (council, airlines, Airways and AIAL). | Land and buildings associated with the rescue fire service (Public Safety Response) as well as vehicles. | Rescue fire component of aircraft landing charges. |
| Airfield supervisory and security services | AIAL provides and maintains security fencing and leases space to Aviation Security Service (AVSEC). | AVSEC provides airside security, security between airside and landside, international passenger control, and perimeter patrols. | Security fencing and office space leased to AVSEC. | Rental from ground lease to AVSEC. |
| Facilities/ assets held for future activities | Holds land. | None. | Land held for the second runway. | Rental from current users of land (e.g., farmers). |
8.12 As noted in Chapter 1, the Commission has focused on those airfield services supplied to aircraft operators - being the bulk of the airfield services supplied by AIAL, for which aircraft operators pay per tonne landing charges. The remaining airfield activities provided by AIAL are facilities provided (by way of lease or other commercial arrangements) to Airways and the Aviation Security Service (AVSEC) to enable those parties to supply airfield activities themselves.
Airfield (Landing) Charges
8.13 AIAL's revenue from airfield activities is principally derived from landing charges levied on aircraft operators based on aircraft weight. In addition, AIAL charges non-scheduled flights (itinerants) that park for more than six hours a parking charge. However, revenue from aircraft parking charges is insignificant relative to landing charge revenues. The Commission has focused on determining whether landing charges need to be controlled.
8.14 Since vesting (1988), landing charges have changed eight times. Table 10 summarises the charges since vesting. In 1992, the international charges for the over 40,000kg class rose 3% to help fund development of the international terminal building (ITB). Upon completion of the ITB, charges were reduced by 3%. 1997 saw an increase in both domestic and international landing charges for small aircraft. Effective 1 September 2000, AIAL increased all its landing charges by 8.5%. AIAL also determined that landing charges would further increase by another 5% in each of the next two years.
8.15 The new landing charges, announced 22 August 2000, were the outcome of consultation between AIAL and its substantial customers as required by the Airport Authorities Amendment Act 1997. Table 9 summarises AIAL's proposals and decision on charges (in terms of percentages increases in charges). The same percentage increases applied to all MCTOW weight breaks.
Table 9: AIAL Consultation Proposals
| | | 2000 | 2001 | 2002 |
|---|
| 29-10-1999 | Proposal | 25.09% | 5.74% | 4.71% |
| 21-12-1999 | Proposal | 33.88% | 3.59% | 2.61% |
| 07-04-2000 | Proposal | 24.73% | 4.90% | 4.82% |
| 17-05-2000 | Proposal | 18.14% | 5.26% | 4.71% |
| 22-8-2000 | Decision | 8.50% | 5.00% | 5.00% |
8.16 Subsequent to AIAL's decision in August 2000, it has reached commercial agreements with a number of major airlines. As part of these arrangements, AIAL agreed to forgo the second 5% increase on 1 September 2002 and to reduce the 1 September 2000 increase in charges to 7.5% (providing a 1% rebate). As a result of the agreement, landing charges have been fixed through to 30 June 2007.277 The agreement between AIAL and Air New Zealand (dated 8 November 2001) resulted in Air New Zealand discontinuing litigation against AIAL on whether AIAL had met its consultation obligations.
8.17 Landing charges at Auckland International Airport since vesting are summarised in Table 10.
Table 10: AIAL Landing Charges
| | | Charge Effective From |
|---|
| MCTOW | # Landings | 01-07-1988 | 01-11-1988 | 01-04-1990 | 01-04-1992 | 01-07-1996 | 01-07-1997 | 01-09-2000 | 01-09-2001 |
|---|
| <1.5 tonnes | <25 | $5.00 / L | $5.00 / L | $8.89 / L | $9.16 / L | $9.16 / L | $25.00 / L | $26.88 / L | $28.22 / L |
| >=25 | $5.00 / L | $5.00 / L | $8.89 / L | $9.16 / L | $9.16 / L | $12.50 / L | $13.44 / L | $14.11 / L |
| 1.5-3 tonnes | <25 | $5.00 / L | $10.00 / L | $8.89 / L | $9.16 / L | $9.16 / L | $25.00 / L | $26.88 / L | $28.22 / L |
| >=25 | $5.00 / L | $10.00 / L | $8.89 / L | $9.16 / L | $9.16 / L | $12.50 / L | $13.44 / L | $14.11 / L |
| 3-6 tonnes | <25 | $9.00 / T | $4.00 / T | $4.20 / T | $4.30 / T | $4.30 / T | $25.00 / L | $26.88 / L | $28.22 / L |
| >=25 | $9.00 / T | $4.00 / T | $4.20 / T | $4.30 / T | $4.30 / T | $4.30 / T | $4.63 / T | $4.85 / T |
| 6-40 tonnes | all | $9.00 / T | $6.00 / T | $6.30 / T | $6.50 / T | $6.50 / T | $6.50 / T | $6.99 / T | $7.34 / T |
| 40+ tonnes | all | $9.00 / T | $10.00 / T | $10.50 / T | $10.80 / T | $10.50 / T | $10.50 / T | $11.29 / T | $11.85 / T |
Landing charges for aircraft under 3 tonnes, and between 3 and 6 tonnes with less than 25 movements per month, are a dollar charge per landing, not a charge per tonne (shaded in table). Note that the 01-07-1988 domestic charges for aircraft over 3 tonne were 5.65% of an airline's revenue. Domestic 40+ tonne charge in 1996 and 1997 unchanged - still $10.80. 2000 charge $11.61, 2001 charge $12.19. Charges for 2000 and 2001 are based on agreements as opposed to August 2000 announcements (includes 1% rebate).
Acquirers of Airfield Activities
8.18 The direct acquirers of the airfield services supplied by AIAL (that are being examined) are the aircraft operators - the commercial airlines and other aircraft operators that land and take-off aircraft at/from Auckland International Airport. The indirect acquirers are the aircraft passengers and persons sending freight by aircraft. Table 11 details the acquirers.
Table 11: Acquirers of Airfield Services Supplied by AIAL
| Class or Grouping | User |
|---|
| Direct Acquirers: Aircraft operators | International - Aerolineas Argentinas, Air New Zealand, Air Pacific, Air Tahiti Nui, Air Vanuatu, Aircalin, Cathay Pacific Airways, China Airlines, EVA Airways, Garuda Indonesia, Korean Air, Malaysia Airlines, Polynesian Airlines, Qantas Airways, Royal Tongan Airlines, Singapore Airlines, Thai Airways International, United Airlines |
| Domestic - Air New Zealand, Freedom Air, Origin Pacific Airways, Qantas Airways |
| Commuter - Air National, Great Barrier Airlines, Mountain Air, Eagle Air, Mount Cook Airlines |
| Cargo Only - Airfreight NZ, Airwork, Ansett Airfreight, DHL, Emery Worldwide, Federal Express |
| General Aviation and Auckland Helicopter Trust |
| Indirect Acquirers | Aircraft passengers, persons sending freight by aircraft (including freight forwarders) |
8.19 AIAL's substantial customers, in their own right, are Air New Zealand, Qantas Airways, Singapore Airlines and United Airlines. The Board of Airlines Representatives of New Zealand Inc (BARNZ) represents these substantial customers in consultation.
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