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Thu, Aug 16, 2007

Air New Zealand Launches Legal Action Against Wellington Airport

WLG Says It Will "Strongly Defend" New Fee Structure

Air New Zealand has decided to pursue legal action against Wellington International Airport, and a controversial proposed landing fee increase.

John Blair, general counsel for the airline, said Air New Zealand is asking the High Court to review the proposal as its costs are set to increase more than 34 percent over the next five years, according to the New Zealand Newsroom. The airline says the costs aren't justified.

WLG acting CEO Mike Basher says a 2.85 percent increase each year for the next five years comes to about 30 cents per passenger and it's up to the airlines whether or not to pass that cost on to customers.

The airport said its charges are reset every five years; the last change was in 2002. Wellington plans to strongly defend the review proceedings, Basher said.

"The increase in charges is directly related to the cost associated with the airport's $85 million investment in enhanced runway safety and the work that is underway to upgrade the international terminal and aircraft facilities to relieve existing congestion and to cope with forecasted passenger growth," he said.

Wellington International Airport Limited (WIAL) said it consulted "comprehensively and constructively" with all concerned airlines for a full year before setting the new charges.

"The charade of so-called consultation does nothing to constrain airports, which start with extortionate increases and seek to demonstrate an open mind by agreeing to lower, but still unjustifiable, increases. It's the childhood trick of 'If you want a dog, ask for a pony' played with consumers' wallets," Blair said.

"The current review of the Commerce Act is a critical opportunity to establish a regime which introduces commercial reality," he added. "No other country has such a derisory price-setting regime. Airports' monopolistic behavior must not be allowed to continue to choke the economic growth of New Zealand."

"We believe that this was a modest increase in relation to a considerable capital expenditure program," Basher said.

"Wellington Airport is acutely aware of its statutory obligations in setting its landing fees and it is our view that we have undertaken the process thoroughly," he continued. "The regulation of airports in New Zealand has a track record of producing good investment in facilities and prices which are still low on a comparative international basis."

Air New Zealand also requested a Judicial review of Auckland Airport's charges last month.



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