Air NZ dominance skewing domestic travel and tourism, says Auckland Airport CEO

Thursday, 20 February 2025

Auckland International Airport management has decried Air New Zealand’s dominance in the domestic travel and tourism market, saying it is not meeting the needs of consumers or regional communities.

The broadside came in the airport’s half-year result this morning, which showed the airport had grown revenue and profit despite the strained economy and competition issues.

There were 2.3% more travellers - 9.46 million people - through the facility in the half year over the prior comparative period, an uptick of 0.1% or 4.27m of those domestic and an increase of 4.1% to 5.19m of those international. But the latter figure was softer than expected, the airport said.

“Air New Zealand is facing difficult fleet challenges which is constraining their ability to grow,” said the airport’s chief executive Carrie Hurihanganui.

“However, we are concerned that the 84% market share they hold over New Zealand’s domestic aviation market is not meeting the needs of consumers or regional communities.”

Hurihanganui said there were now 1.5 million fewer seats flying in the domestic network than in 2019, or 29,000 fewer seats per week, and “the regions are bearing the brunt of this through reduced morning and evening services, making day trips impossible for many business travellers, and a shrinking pool of alternative options.

“We think questions need to be raised about the competitiveness of the domestic aviation sector, with a focus on regional routes. Left unchecked, the benefits of tourism and travel to New Zealand’s regions will continue to be held back by fewer planes flying and lack of competitive airfares.”

In the international markets, Australians choosing Asia as an offshore travel destination over New Zealand was described as a key factor keeping inbound numbers subdued.

“The global market to attract tourists is highly competitive, and that’s making it more challenging for New Zealand to secure additional airline routes and services,” said Hurihanganui.

There were some bright spots within the period - the Airport achieved its busiest month for international travel since 2019 in December, followed by 36,000 international travellers flowing through the terminal on January 5- its busiest day in more than five years.

But she said international market capacity was at 89% compared with 2019 levels, affected by competition market New Zealand was just not keeping up with: “A key factor driving this is Australian travellers looking beyond New Zealand and choosing to visit destinations in Asia for their holidays,” Hurihanganui said.

Despite the constrained conditions, Auckland International Airport grew its revenue and profit. It reported revenue up 13% to $499.9m, while after tax profit excluding revaluations was up 2% to $187.3m over last year’s interim profit. Revaluations added $50.5m to this year’s profit figure while last year there was a $27.1m loss in the same period.

Aeronautical revenues rose 15% compared with the same period last year, although Hurihanganui said a significant reason for this was the airport catching up on a shortfall in revenue last year coming from a price freeze introduced that year to support airlines as they recovered from the pandemic. The price freeze was lifted at the start of the 2024 financial year.

On the new build front, the airport’s new integrated domestic terminal programme was now one third complete; the airfield expansion was 66.5% advanced alongside major stormwater improvements; and the airport’s new transport hub was completed and open to travellers, with its rooftop solar array delivering 1.2 megawatts of energy.

Airlines have been critical of the scale of the development, which they said was beyond what was required and would lead to higher airfares.