Airports fear proposed border costs for new flights could chill regional growth

Friday, 16 August 2024

Airports fear regional growth could be stymied by a proposal for airports to pay the costs of screening passengers on any new international flights.

Passenger levies cover the costs of biosecurity and customs screening for overseas flights, but not the set up costs for new flights.

A proposal to change this would see any airports that start or restart international flights covering those costs themselves.

Industry body NZ Airports says this could stymie growth in the regions.

Growth in the regions could be stymied if a proposal for airports to pay the costs for screening passengers on any new international flights is implemented, an airport industry body says.

If not managed well, any change 'could have a chilling effect on moves by regional airports to go international“, NZ Airports chief executive Billie Moore said.

NZ Airports chief executive Billie Moore said that if not managed well, any change 'could have a chilling effect on moves by regional airports to go international“.

The Ministry for Primary Industries is consulting on proposed regulations to recoup biosecurity and customs costs from airports for any new or restarting international flights “as travellers and airports receive the benefits from these flights”.

Wellington Airport's unusual black plane is a converted grain silo used as a fire training simulator. Despite its odd appearance, it helps train firefighters for aircraft emergencies and rescue scenarios.

Moore said it “takes a lot” to attract airlines to New Zealand, and the timing is “really challenging” for more than one regional airport.

She could not specify which airports are looking at starting international flights, but said Hamilton, Rotorua and Dunedin airports have all previously catered for international flights.

Biosecurity NZ said it’s government policy to recover the costs of border services from those who benefit from the services and those who create risks. (File photo)

Biosecurity New Zealand’s commissioner North Mike Inglis said cost recovery plays an important role in funding New Zealand’s biosecurity protections.

“It’s long-standing government policy to recover the costs of providing border services from those who benefit from the services, or from those who create risks.”

Inglis said both establishment costs (such as for staffing, equipment, leases, detector dog kennels and vehicles), and operating costs (like wages, travel and IT expenses), can be recovered under the Airports Act, but supporting regulations are needed to fully implement this.

Hamilton Airport group general manager, Ben Langley said a scheduled international service would bring significant benefit to the region.

The consultation information states that any new regulations would help manage the Crown’s financial risk, and “could also provide greater certainty to airports that may be considering offering international services on the potential costs associated with providing international flights”.

But Moore said this would not be fair to regional airports, as the existing international airports have not had to pay to set up passenger screening.

Until now, the government has picked up the tab for setting up screening services where a regional airport has started international flights, although that is not ideal as those costs would not have been budgeted for, Moore said.

Dunedin Airport chief executive Daniel De Bono said international flights are important to the community and the region’s economic growth.

“These things need to be sorted out, but let’s keep our eyes on the prize, and that is to increase connectivity for regional communities.”

Hamilton Airport group general manager, Ben Langley said there’s “no doubt a scheduled international service would bring significant benefit to the region through increased tourism and trade opportunities, even one flight a day could add millions to annual regional GDP”.

Starting new flights would “depend on the costs involved, but a full cost recovery scenario would likely be prohibitive”, Langley said.

“We have always said we are keen on resuming scheduled international flights, should an airline wish to use Hamilton Airport. But that’s primarily a commercial decision for airlines to make. It’s not a decision for the airport.”

Dunedin Airport chief executive Daniel De Bono said the airport has this year hosted international flights for the P!nk concert and Fiji’s Drua team, “and we look forward to bringing other international flights back, knowing how important this is to our community and the region’s economic growth”.

Inglis said there has been increasing demand for international travel services post-Covid and if local airports want to capitalise on demand, “there needs to be transparency around what kinds of costs will be payable and who will pay”.

“Funding additional costs for regional airports would create a deficit that would likely see levy increases for international passengers,” Inglis said.

“However, it is possible that operating costs can be fully or partially recovered. That’s why two of the consultation options include using the existing levies,” he said.

Travellers arriving by air pay a Customs levy of $16.59 and a biosecurity levy of $16.92. Departing air travellers pay a Customs levy of $4.52. These charges are included in tickets at the time of booking.

Customs has proposed reducing the arrival levy to $14.17 and the departure levy to $3.45 from December 1. The biosecurity levy is proposed to remain the same.