GETTING in and out of Gisborne will soon be more difficult, with flights to be cut back in response to a dramatic rise in airport landing fees by Eastland Group.
Air New Zealand says the increase of an average of 106 percent over the three different plane sizes that land here is unsustainable and 16 flights to Auckland and Wellington of the 144 a week it runs now will be cut.
Eastland Group logistics manager Andrew Gaddum says the change in landing fees was driven by a financial review of the airport.
The group wants to make sure the airport does not end up like the region’s railway line.
Under the new charges, fares would go up by an average of $8 per return journey.
The main reason for the landing fee increase was to get more income for a $3 million resurfacing of the runway.
Eastland Group also wants to re-roof and extend the terminal because as passenger numbers increase and larger 50-seat aircraft are used more, changes to the layout and size of the terminal building will be needed, Mr Gaddum says.
“At peak times the terminal can be very congested.”
Air New Zealand’s Australasia group general manager Bruce Parton says many Gisborne services are already marginal from a financial perspective and the increased fees will make some services unsustainable in future.
“This will the have the impact of reducing tourist numbers and will see some services become uneconomic. As a result, we will reduce capacity from Wellington and Auckland to Gisborne,” Mr Parton says.
Further increases of 5 percent in each of the next two years will make Gisborne one of the most expensive domestic airports Air New Zealand flies to.
The airport was previously run by Gisborne District Council at a loss and was subsidised by rates.
In 2005, Eastland Group took over and since then it has made a small profit each year through development of other revenue streams like paid parking, an Eastland Community Trust subsidy and being able to defer large amounts of capital that occur in any one year.
Eastland Group pays a lease of only $100,000 a year to the council, well below the market. Mr Gaddum says it is valued at $600,000 a year.
“If the council was to charge Eastland Group the full market value for leasing the airport, then an additional $500,000 in revenue over and above the new landing charges would be needed.”
Air NZ has already cut the number of flights and seats into Gisborne.
Over the period March, April, May 2010 there were 967 flights and 23,178 seats. For the same period in 2012 it was 900 flights and 20,944 seats, a reduction of 10 percent in seats and 7 percent in flights.
Mr Gaddum said a planned fee decrease by the company that operates the control tower would cushion impact of the landing fee increase for Air NZ.
If the planned changes to control tower charges go ahead, the charge for landing a B1900 in Gisborne will decrease by $19.33/landing or $1.02/seat and for a Q300 it will increase by $38.67/landing or $0.77/seat.
The proposed new landing charges were set using a model developed by the NZ Airports Association.
From December 1, the landing charge for a 19-seater B1900 rises 82 percent from $68.40 to $150.77 a plane. The landing fee for this type of plane had not changed for 11 years, said Mr Gaddum.
The 50-seater Q300 fee lifts 98 percent from $190 to $376.55. This has not altered since these planes were introduced to Gisborne in 2008. This landing fee was heavily subsidised by the ECT for the first three years.
The ATR, or 68-seater landing fee charge has jumped 150 percent – from $185 to $458.45. These planes rarely come to Gisborne.
The landing fees are higher for the bigger planes because the heavier the aircraft, the more it costs to land in terms of wear and tear on the runway as well as increased peak demands on the terminal building.
Up until now, landing fees were set in relation to other regional airports.