Queenstown airport's $350 million expansion expected to push up the cost of travel

The Queenstown Airport Corporation has confirmed that talks are underway with four major airlines that are expected to cover a significant part of a $350 million growth plan via increased airport fees. The airlines have made it clear that extra cost wil be passed on to air travellers.

This week Qantas and Air New Zealand joined forces to attack Auckland Airport’s $3.9 billion expansion plans, saying that increased airline landing fees would damage tourism, hit trade and drive up the cost of travel.

Air NZ's Mat Bolland says the airline is "working constructively" with Queenstown Airport.

Today Air New Zealand’s chief corporate affairs officer Mat Bolland confirmed to Crux that the national airline was “working constructively” with Queenstown Airport and was “looking forward to continuing discussions”.

The Queenstown Airport Corporation (QAC) says it has already met with all four airlines that operate from Queenstown and discussions “went well and the airlines indicated that they are comfortable with the direction proposed".

QAC also told Crux the $350 million needed for their masterplan expansion works would not carry a debt risk for QLDC ratepayers, who own 75 percent of the airport.

Airport chief executive Glen Sowry was clear his organisation needed to plan the $350 million funding within debt limits.

“We need to ensure that we live within our means. We will not be seeking a financial contribution from our shareholders to finance the Master Plan. Funding for the delivery of the Master Plan will come from a mix of free cash flow and debt.”

Crux asked Mr Sowry if Queenstown airport debt could potentially affect the debt position of the Queenstown Lakes District Council, and also reduce the airport’s dividend payments to the council and 25 percent shareholder Auckland Airport.

“We intend to pay dividends to our shareholders over the period, while ensuring there is sufficient capacity to enable the required investment in aeronautical and other assets.

Queenstown Airport CEO Glen Sowry: 'We need to ensure that we live within our means'.

“QAC debt is the responsibility of QAC and its board. Like any other company, we have strict legal and fiduciary responsibilities and obligations to ensure QAC is financially sustainable, including maintaining prudent and serviceable debt levels.”

Queenstown airport managers potentially face some tough negotiations with their four airline customers given the unusual attack on Auckland Airport by both Air New Zealand and Qantas two days ago.

A joint media statement from the two airlines accuses Auckland Airport (AIAL) of forcing air travel costs beyond the reach of the average traveller.

“Air New Zealand and Qantas have each provided AIAL with details of their network impact, underpinned by independent economic analysis. This shows the cost of the airport’s planned redevelopment is predicted to increase airport charges to the point that air travel may become unaffordable for a significant number of travellers. This would impact both airlines, including Qantas’ subsidiary Jetstar.”

Auckland Airport told RNZ that it was disappointed by the airlines' response and rejected claims that its infrastructure spending would hurt the travel market.

"Our independent studies show it's not true," a spokesperson said.

"Airlines have suggested that we keep travellers in the existing domestic terminal for longer. Travellers don't want that, and it's not the right outcome.

"The terminal is 57 years old and needs replacing. It will not get any easier or cheaper."

The airport said airlines had benefited from "very low domestic charges" that reflect the age and condition of the domestic terminal.

"Major airlines are reporting very healthy or even record profits, with some committing to multibillion-dollar investment in their own fleet and airport hangars.

"We need to do the same to ensure travellers have a great experience when they travel through Auckland Airport."

The airport said its charges made up about three to five percent of an airfare in the 2024 financial year.

The Queenstown Airport Corporation is currently seeking community feedback on its master plan.