Gisborne Airport Landing Charges Review

Gisborne Airport Landing Charges Review

Landing charges at Gisborne Airport are set to rise for the first time in more than 11 years.

The change has been driven by the airport’s financial review which looked at costs to run and manage the essential external link.

One of the key drivers behind the increase is the need to resurface the runway, at a cost in the region of $2.5million, and a desire by Eastland Group, who manage the airport, to ensure it does not end up like the region's railway line.

Eastland Group general manager–logistics, Andrew Gaddum, says the increase is essential to keep this key transport hub in safe, fit for purpose condition so as it continues to serve this region.

“Historically, landing charges have been arrived at by a negotiated process with little or no commercial consideration for the costs of maintaining or ongoing capital expenditure required .So even when the landing fees increased 11 years ago they were never set on any form of commercial basis. This year, we have done a full financial analysis to derive these landing charges, based on methodology developed by the New Zealand Airports Association. Prior to Eastland Group taking over the lease and management of the Airport in 2005 the rate payers of the Gisborne District subsidized the airport users, under this pricing model this is no longer the case.”

Gisborne has a small flying population–both in the number of aircraft movements, and the number of passengers, yet has to provide the same core infrastructure, thus the costs will be slightly higher per unit than airports with greater volumes of aircraft and passenger traffic.

Last year’s asset management plan, which looked at the airport’s maintenance and development needs, reinforced the requirement for the runway to be resurfaced in the near future, and highlighted that the terminal building was in need of some improvements, to meet the growing numbers of passengers utilising the airport.

For the 12 months ending June 2000, 74,930 passengers passed through the terminal this climbed to 131,013 for the year end June 2012.

“Air New Zealand are not happy with our proposed increase in landing fees and have threatened to withdraw services, but they need to accept that this piece of regional infrastructure must pay its own way and they can’t expect all ratepayers to subsidise those that can afford to fly” says Mr Gaddum. “The reality is that as they have been bringing on more of the larger 50 seat Q300 aircraft they have been decreasing flight frequency and this has happened with the existing landing charges. Mr Gaddum feels that Air NZ is being less than totally transparent about its cost structure to operate into and out of Gisborne as there is a current proposal out by New Zealand Airways –which operate the control tower and approach service into Gisborne Airport –that if implemented would largely offset the proposed increase in landing charges.

Air NZ may argue that Gisborne Airport’s landing charges are high compared to other New Zealand airports, however other council owned airports may be happy to use rate payer money to subsidise their operations, but when airports that are required to operate commercially are used as a comparator Gisborne Airport is not an outlier. Under Gisborne Airport’s proposed pricing both the 19 seat 1900D and 50 seat Q300 aircraft operating into Gisborne by Air New Zealand will be cheaper than the landing fee for Wellington Airport. In the case of Rotorua they charge an additional departure fee of $5 per passenger, when that charge is added to the landing charge it also makes them more expensive than Gisborne.

Anearlierreviewoflandingchargesin2007wasabandonedbecausethe airport did not have Airport Authority status. Since then the airport has gained that status and now has to adhere to the Airport Authorities Acting terms of setting landing charges.

Landing charges can only be changed every five years, and it involves a very methodical process where the airport is required to consult with the airline and provide them with detailed financial, asset condition information along with future capital expenditure plans.

Gisborne Airport has not yet notified the final landing charges to Air New Zealand and other airport users, it is expected that the process will be completed by the end of October.

ENDS

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