Auckland Airport (AKL) in New Zealand is planning to revamp its aging domestic terminal, which will improve operations, but also means higher charges for airlines in the future.
The airport said in a full-year earnings report published on August 18, 2022, that it had used the quieter time during the COVID-19 pandemic to focus on maintenance and infrastructure projects.
“We are in a global race to attract back visitors and international airline routes and services and New Zealand needs to work hard to ensure their return,” Auckland Airport Chair Patrick Strange said in the statement.
Under the plans, Auckland Airport intends to construct a purpose-built domestic facility, which will be merged into the eastern end of the existing international terminal.
“When the current domestic terminal opened in the 1960s it was the dawn of the jet age,” commented Chief Executive Carrie Hurihanganui, who took on the role in February 2022. “It’s now more than half a century old and while we have continued to reinvest in the facility to support growth in domestic travel and the needs of travelers, this infrastructure is now nearing the end of its life.”
The airport is in talks with airlines over the design of the new combined terminal, which will cost NZD1 billion ($621 million).
However, airlines can expect higher prices for the upgraded infrastructure. The airport operator said carriers at AKL currently pay “some of the lowest domestic charges in Australasia” because of the age of the terminal. Once investments are made, prices will therefore increase over time.
“We look forward to working with our airline partners as we consult on the next stages of development for the combined terminal,” Hurihanganui said.
Auckland Airport reported its second ever underlying loss in the 12 months to June 30, 2022, but said it expected a return to profit in the current year after New Zealand borders opened and international travel was able to restart to the popular tourism destination.
The airport predicts it will make an underlying profit of between NZD50 million and NZD100 million ($31-$62 million) for the 2023 financial year, compared with a loss of NZD11.6 million for the recently ended financial year.
“As aviation rebounds there continues to be some uncertainty about the shape of recovery ahead with global operational challenges, such as labour shortages, currently constraining the system’s capacity,” Hurihanganui said.
“However, Auckland Airport continues to take a long-term view and we remain optimistic about the future with the strong global appetite that exists for travel alongside Auckland’s position as a key aviation hub in the South Pacific.”