OC240577
25 June 2024
Irene
[FYI request #27024 email]>
Tēnā koe Irene,
I refer to your email dated 27 May 2024, requesting the following briefing papers under the
Of icial Information Act 1982 (the Act):
“- OC240270 — Meeting with Air New Zealand
- OC240273 — Meeting with Board of Airline Representatives New Zealand
- OC240310 — Aide Memoire: Ministerial Meeting with the Civil Aviation Authority
- OC240282 — Meeting with Carrie Hurihanganui, Chief Executive of Auckland
International Airport Limited
- OC240276 — Attendance at Regional Airport Summit
- OC240362 — Meeting with Wellington International Airport
- OC240419 — Meeting with Jon Duffy, Chief Executive of Consumer New Zealand”
I am releasing all seven briefings to you with some information withheld or refused. The
document schedule at Annex 1 details how the briefings have been treated.
The following sections of the Act have been used:
9(2)(a)
to protect the privacy of natural persons
9(2)(b)(ii)
to protect information where the making available of the information
would be likely unreasonably to prejudice the commercial position of
the person who supplied or who is the subject of the information
9(2)(ba)(i)
to protect information which is subject to an obligation of confidence or
which any person has been or could be compelled to provide under
the authority of any enactment, where the making available of the
information would be likely to prejudice the supply of similar
information, or information from the same source, and it is in the public
interest that such information should continue to be supplied
9(2)(ba)(ii)
to protect information which is subject to an obligation of confidence or
which any person has been or could be compelled to provide under
the authority of any enactment, where the making available of the
information would be likely otherwise to damage the public interest
9(2)(f)(iv)
to maintain the constitutional conventions for the time being which
protect the confidentiality of advice tendered by Ministers of the Crown
and officials
transport.govt.nz | hei-arataki.nz
HEAD OFFICE: PO Box 3175, Wellington 6140, New Zealand. PH: +64 4 439 9000
AUCKLAND OFFICE: NZ Government Auckland Policy Office, PO Box 106483, Auckland 1143, New Zealand. PH: +64 4 439 9000
9(2)(g)(i)
to maintain the effective conduct of public affairs through the free and
frank expression of opinions by or between or to Ministers of the
Crown or members of an organisation or officers and employees of
any public service agency or organisation in the course of their duty
18(c)(i)
the making available of the information requested would be contrary to
the provisions of a specified enactment
With regard to the information that has been withheld under section 9 of the Act, I am satisfied
that the reasons for withholding the information at this time are not outweighed by public
interest considerations that would make it desirable to make the information available.
You have the right to seek an investigation and review of this response by the Ombudsman,
in accordance with section 28(3) of the Act. The relevant details can be found on the
Ombudsman’s websit
e www.ombudsman.parliament.nz
The Ministry publishes our Of icial Information Act responses and the information contained
in our reply to you may be published on the Ministry website. Before publishing we wil
remove any personal or identifiable information.
Nāku noa, nā
Hilary Penman
Manager, Accountability & Correspondence
Annex 1 - Document Schedule
Doc# Reference Document
Decision on release
1
OC240270 Meeting with Air New Zealand
Release with some information withheld
or refused under Sections 9(2)(a) and
18(c)(i).
2
OC240273 Meeting with Board of Airline
Release with some information withheld
Representatives New Zealand
under Section 9(2)(a).
3
OC240310 Aide memoire: Ministerial Meeting with
Release with some information withheld
the Civil Aviation Authority
under Sections 9(2)(a), 9(2)(ba)(ii),
9(2)(f)(iv) and 9(2)(g)(i).
4
OC240282 Meeting with Carrie Hurihanganui, Chief Release with some information withheld
Executive of Auckland International
under Section 9(2)(a).
Airport Limited
5
OC240276 Attendance at Regional Airport Summit
Release with some information withheld
under Sections 9(2)(a), 9(2)(b)(i ) and
9(2)(f)(iv).
6
OC240362 Meeting with Wel ington International
Release with some information withheld
Airport
under Sections 9(2)(a), 9(2)(ba)(i) and
9(2)(g)(i).
7
OC240419 Meeting with Jon Duffy, Chief Executive Release with some information withheld
of Consumer New Zealand
under Sections 9(2)(a) and 9(2)(f)(iv).
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Meeting with Air New Zealand
Key points
• Air New Zealand is experiencing operational challenges with some of the engines used in
its aircraft fleet, causing it to make schedule changes and pausing flights on three
international routes.
s 18(c)(i)
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• Air New Zealand has expressed concerns about Auckland Airport’s proposed level of
investment ($3.9 billion). The airline believes this will lead to increased aeronautical
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charges and potentially unaffordable airfares for some passengers, which will damage
demand for air travel.
• Air New Zealand has requested that the Minister of Commerce and Consumer Affairs
launch an inquiry under the Commerce Act as it believes the current regulation is failing
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to constrain overspending by Auckland Airport.
• As the Commerce Commission is stil assessing Auckland Airport’s pricing for the 2022 –
2027 price setting event, the Minister of Commerce has indicated he would await the
conclusion of this process before deciding on whether to request an inquiry into whether
airports should be subjected to further forms of regulation.
Air New Zealand’s Operational Update
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Aircraft engine issues
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1
Air New Zealand has been experiencing issues with the engines on some of its
Boeing 787 aircraft which has caused it to alter its schedule. These aircraft are
powered by Rolls-Royce Trent 1000 engines.
2
Air New Zealand continues to be impacted by challenges with availability of Rolls-
Royce Trent 1000 engines. As a result of the global shortage of Rolls-Royce engines,
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three of Air New Zealand’s Boeing 787 aircraft wil be unavailable for an extended
period of time.
3
Air New Zealand has also been experiencing engine issues with the A320/A321
aircraft. These aircraft are powered by Pratt & Whitney engines.
4
In July 2023, Pratt & Whitney disclosed a condition affecting the maintenance plan for
the Geared Turbofan (GTF) jet engine fleet. Up to 700 engines globally will be
impacted over the next three years, with the effect on global aviation felt most in
2024.
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5
Air New Zealand has 32 A320/321 aircraft in its fleet of 108 aircraft, serving Australia,
the Pacific Islands and domestic New Zealand. While this maintenance issue does
not present a safety risk, it has caused Air New Zealand to revise its flight schedule
because of adjustments made to the engine maintenance plan.
Impact of the engine issues
6
Air New Zealand has reorganised most of its schedule by consolidating some flying
and moving aircraft to different routes. Most customers who are impacted will still fly
on the same day. Some on international flights will be reaccommodated to services a
day either side of their original booking and some may have a cabin change due to a
different aircraft being used.
7
Air New Zealand will pause three of its international routes:
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Auckland – Chicago from 31 March (B787)
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•
Auckland - Seoul from 1 April 2024 (B787), and
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•
Auckland - Hobart from 5 April 2024 (A320).
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s 18(c)(i)
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Auckland Airport Development Plan
14
In March 2023, Auckland Airport announced a $3.9 billion development plan, which
includes an integrated terminal for domestic jet and international services
15
Air New Zealand has expressed concerns about Auckland Airport’s proposed level of
investment. The airline believes this will lead to increased aeronautical charges and
potentially unaffordable airfares for some passengers, which will damage demand for
air travel.
16
Air New Zealand has lodged an official request with the Minister of Commerce
seeking an urgent inquiry into the regulation of airports under the Commerce Act as it
believes the current regulation is failing to constrain overspending by Auckland
Airport.
17
Air New Zealand notes that the aeronautical charges at Auckland Airport is forecast to
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increase from $9 per domestic passenger today to $46 per domestic passenger in
2032, which will make flying unaffordable for some Kiwis unless there is regulatory
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change.
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Airport competition settings
18
Since 2010, Auckland, Wellington and Christchurch airports have been subject to
information disclosure regulation under Part 4 of the Commerce Act 1986 (which
regulates markets where there is little or no competition).
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19
The Commerce Commission undertakes reporting and monitoring under the
Commerce Act, and the Minister of Commerce is the responsible Minister.
20
Information disclosure is the lightest form of regulation under Part 4. Airports must
disclose a range of information annually and at each five-yearly price-setting event.
The Commission reports on the disclosed information but it does not have the power
to compel airports to change their prices.
INFORMATION
21
Airlines have long argued for a move to negotiate/arbitrate regulation which is the
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next step up the regulatory ladder under the Commerce Act. Airports would be
required to negotiate with airlines on prices and quality, and, if negotiation was
unsuccessful, to enter into binding arbitration.
22
Air New Zealand is a member of The Board of Airline Representatives New Zealand
(BARNZ). You wil be meeting with Cath O’Brien, the Executive Director of BARNZ,
on Thursday 27 March. BARNZ’s position differs slightly from Air New Zealand’s, in
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that it accepts a negotiate/arbitrate regime would be complex to set up, require
consultation, and would not necessarily be needed for all regulated airports.
23
BARNZ suggest that Auckland Airport should be subjected to an Individual Price-
Quality Path (IPP) regulation such as applies to electricity lines businesses.
24
The price-quality paths that are set under this form of regulation are intended to
influence the behaviour of those businesses by limiting what they can recover from
their consumers. Each business is constrained by either the maximum average prices
that it can charge, or the total revenue it can recover from its consumers. The paths
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also set standards for the quality of service that each business must meet. This
ensures that businesses do not have incentives to reduce quality to maximise profits
under their price-quality path.
25
An inquiry would still be required to introduce an IPP style of regulation for Auckland
Airport.
26
As the Commerce Commission is stil assessing Auckland Airport’s pricing for the
2022 – 2027 price setting event, the Minister of Commerce has indicated he would
await the conclusion of this process before deciding on whether to request an inquiry
into whether or not airports should be subjected to further forms of regulation.
27
The Commission intends to publish a draft report by June 2024, with a final report by
the end of 2024.
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Other Issues
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Monitoring of airfares
28
New Zealand airports are calling for domestic airfares and airline performance to be
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disclosed to provide greater transparency for consumers, amid record-high domestic
fares.
29
Data released by Stats NZ showed domestic airfares went up 7.4% in February
compared to January 2024. Year-on-year domestic fares increased from February
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2023 by 7.7%.
30
The Civil Aviation Act 2023 enables regulations to be made requiring information
disclosure by aviation sector participants, including passenger rights and performance
data. Disclosing data could help increase transparency to aid consumer choice and
place downward pressure on airfares. However, given limited competition in the
domestic market, many customers will not be able to make alternative choices.
Airlines, including Air New Zealand, have previously raised concerns about disclosure
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of this type of information as they view it as commercially sensitive.
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Biography
Greg Foran, Chief Executive Officer
Greg Foran started as Chief Executive Officer of Air New Zealand on 3
February 2020.
He joined the airline from Walmart US where he was Chief Executive
Officer from 2014 to 2019. He was responsible for the strategic direction
and performance of the company’s 4,600 stores and more than 1 mil ion
staff.
He joined Walmart International in 2011 and served in several capacities, including President
and CEO of Walmart China. Prior to joining Walmart International he held several senior
positions with Woolworths.
Greg attended Advanced Management Programs at Harvard University and the University of
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Virginia. He also holds a Diploma in Management from the New Zealand Institute of
Management.
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Annex 1: Talking Points
MEETING WITH AIR NEW ZEALAND
Operational issues
• Is Air New Zealand considering other measures such as leasing of aircraft to mitigate
widescale disruption to its schedules?
• Are there other operational issues, apart from engine issues, that are preventing Air
New Zealand from meeting flight schedules?
s 18(c)(i)
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Auckland issues
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• How is the relationship between Air New Zealand and Auckland Airports, given recent
media articles from both organisations about Auckland Airport’s proposed investments?
• Why do you think the benefits of moving to a negotiate/ arbitrate regime for airports would
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exceed the costs of regulation?
Information disclosure
• What are your views on the call by airports for the Ministry to develop regulations to
require airfare disclosure?
• Are there other key aviation statistics that should be included in any information
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disclosure regime for the sector?
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Meeting with Board of Airline Representatives New Zealand
Key points
• BARNZ is a not-for-profit incorporated society representing various aviation-related
entities, has objectives to establish communication, represent members, and determine
positions on legislative actions.
• BARNZ have criticised Auckland Airport's $3.9 bil ion infrastructure plans and pricing,
suggesting it wil lead to increased aeronautical charges and potentially unaffordable
airfares for some passengers, which wil damage demand for air travel.
• BARNZ is advocating for a change to the regulatory regime for airports. Whilst it prefers
negotiate/arbitrate regulation, it has recently proposed moving Auckland Airport to
Individual Price-Quality Path regulation similar to electricity lines businesses. 1982
• BARNZ is calling for stronger strategic leadership in aviation. The Interim Aviation
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Council which has just been set up, is a first step towards achieving a more strategic
leadership for the sector.
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• BARNZ notes that the absence of an overarching aviation strategy for New Zealand is
problematic, as a strategy would inform the criticality of air connections for New Zealand
and associated decisions on important critical infrastructure needs.
• BARNZ wants a clear government strategy to support a consistent supply of sustainable
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aviation fuel to reduce transport emissions.
• BARNZ supports the introduction of minimum fuel stockholding obligation for jet fuel
suppliers. From 1 January 2025, fuel importers wil be required to hold enough jet fuel in
New Zealand to provide 24 days of cover on average each month.
Background
INFORMATION
1
The Board of Airline Representatives of New Zealand (BARNZ) is an incorporated
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society representing 26 member airlines, and five non-airline organisations
associated with the airline and aviation industries.
2
The objectives of BARNZ include:
• the establishment of recognised means of communication between its members
and other bodies whose interests or actions affect its members and the aviation
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industry
• representing its members in matters affecting common interests
• determining members’ position on legislative, judicial, and administrative actions
affecting the provision of air services and the representation of members before
decision-making bodies.
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BARNZ has been critical of Auckland Airport’s infrastructure plans and pricing
and wants stronger regulation
3
In March 2023, Auckland Airport announced a $3.9 bil ion development plan, which
includes an integrated terminal for domestic jet and international services.
4
BARNZ has been particularly critical of the airport’s pricing practices, arguing that
they result in monopoly pricing and inflated air travel costs due to an inadequate
regulatory framework. It has also expressed concerns about the airport’s
infrastructure deficit and high capital works costs.
5
Since 2010, Auckland, Wellington and Christchurch airports have been subject to
information disclosure regulation under Part 4 of the Commerce Act 1986 (which
regulates markets where there is lit le or no competition). Information disclosure, the
lightest form of regulation, mandates airports to annually disclose a range of
information and at every five-year price-setting event. The Commission reports on the
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disclosed information, but it does not have the power to compel airports to change
their prices.
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6
Airlines, including Air New Zealand, have long advocated for a shift to
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negotiate/arbitrate regulation, which would require airports to negotiate with airlines
on prices and quality, and, if negotiation was unsuccessful, to enter into binding
arbitration.
7
Air New Zealand has lodged an official request with the Minister of Commerce
seeking an urgent inquiry into the regulation of airports under the Commerce Act as it
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believes the current regulation is failing to constrain overspending by Auckland
Airport.
8
BARNZ considers that negotiate/arbitrate is the best form of regulation for airports
overall. However, implementing it for the first time will be a lengthy and complex
process. BARNZ are of the view that, in the meantime, Auckland Airport should be
subjected to an Individual Price-Quality Path (IPP) regulation such as applies to
electricity lines businesses. INFORMATION
9
Price-quality paths are intended to influence business behaviour by limiting what they
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can recover from their consumers. Each business is constrained by either the
maximum average prices that it can charge or the total revenue it can recover from its
consumers. The paths also set service quality standards to disincentivise businesses
from reducing quality for profit maximisation.
10
An inquiry would stil be required to introduce an IPP style of regulation for Auckland
Airport. The Minister of Commerce has indicated he would wait to decide whether
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airports should be subjected to further forms of regulation until after the Commerce
Commission concludes its assessment of Auckland Airport’s pricing for the 2022 –
2027 price-setting event. The Commission intends to publish a draft report by June
2024, with a final report by the end of 2024.
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Strategic leadership in aviation
11
BARNZ is calling for stronger strategic leadership in the aviation sector. This is in line
with the recommendations made by the independent panel that conducted the Air
Navigation Systems Review.
12
The Panel concluded that the system is safe and well-regarded. However, the Panel
identified a lack of system thinking and leadership, which leads to risks to aviation
system integrity and performance, security and resilience, and New Zealand’s ability
to benefit from emerging technologies.
13
The Panel recommended:
•
A ministerially appointed interim and permanent Aviation Council with whole-
of-system oversight responsibilities
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•
A new and long-range National Aviation Policy Statement (NAPS)
•
A Flight Plan for New Zealand: a medium-term direction for aviation and air
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navigation.
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14
In response to the Panel’s recommendations, the Ministry has convened an Interim
Aviation Council comprised of senior leaders from the public and private sectors,
including Cath O’Brien who represents BARNZ on the Council.
15
The first meeting of the Interim Aviation Council took place on 15 March 2024. A key
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issue discussed was the development of a National Aviation Policy Statement.
Council members agreed that the policy statement should recognise the key role that
aviation plays in the economy and be ambitious for the future.
16
We wil work with the Council to develop a National Aviation Policy Statement and
prioritise action on other Panel recommendations.
Critical aviation infrastructure
INFORMATION
17
BARNZ notes that the absence of an overarching aviation strategy for New Zealand is
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problematic, as a strategy would inform the criticality of air connections for New
Zealand and associated decisions on important critical infrastructure needs.
Airport infrastructure for the South Island
18
BARNZ has supported Christchurch Airport’s plans to investigate a new airport for the
Central Otago region at Tarras. This is because from around 2032, it is likely that
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Queenstown Airport would not be able to accommodate any further growth as this wil
be capped under the Queenstown Lakes District Council noise boundaries.
19
Christchurch Airport has paused its consideration of the Tarras option for now, citing
the need for additional time to assess the project's impacts and to consult with both
local and national stakeholders.
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System resilience
20
Ohakea airbase is used by many international flights to Auckland as an emergency
alternative port. Airplanes are required to be able to make an emergency landing at
an alternative port if needed.
21
When Ohakea is not available as an emergency alternative, airplanes need to use
another alternative port, generally Christchurch Airport. Using Christchurch requires
planes to carry more fuel, which affects aircraft weight, and therefore passenger and
freight capacity.
22
The arrangement with the New Zealand Defence Force (NZDF) has benefited New
Zealand, the environment, and airlines; including significant fuel cost savings and
reducing aviation CO2 emissions by around 300,000 tonnes since 2011.
23
However, there have been longstanding issues with the availability of fire-fighting
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crews at Ohakea, which has limited its availability for use as an alternative port.
24
BARNZ has been working with the NZDF to support an increase in fire-fighting
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capacity, and arrangements are underway to put more capacity in place. Ohakea is
still not yet available 24/7, and interim measures are being used to maintain the
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required rescue fire service staffing levels.
Alternative fuels for transport are important for our decarbonised future
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25
Domestic aviation accounts for approximately six percent of New Zealand’s CO2
emissions. A collaborative effort from government and industry wil be necessary to
decarbonise this sector.
Biofuels and hydrogen may play a significant role in reducing transport emissions
26
Biofuels have the capacity to play a significant role in reducing transport emissions.
They offer a practical alternative to fossil fuels in aviation, shipping, and heavy road
freight where low emission vehicles are prohibitively expensive or are stil being
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developed.
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Sustainable Aviation Fuel (SAF) wil be a key energy source to decarbonise aviation –
domestically and internationally
27
SAF are a type of advanced biofuel commonly produced from wastes and residues,
though they can also be produced synthetically. SAF offers a strong fuel
decarbonisation lever for the aviation industry, which has limited options that can be
implemented once operational efficiencies, such as optimisation of flight routes and
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increasing jet engine energy efficiency, are exhausted.
28
Fuel switching is one of the few viable methods of reducing aviation greenhouse gas
emissions without curbing demand, particularly for long-haul flights where
electrification and hydrogen are not yet viable. However, SAF remains one of the
most expensive forms of biofuels available, retailing at around two to eight times more
than the cost of conventional jet fuel. This makes it challenging for airlines to
introduce higher SAF blends into their jet fuel supply.
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29
BARNZ, acknowledging the significance of sustainable aviation for New Zealand's
prosperity, advocates for SAF to reduce greenhouse gas emissions and achieve
net-zero CO2 emissions by 2050. They call for a clear government strategy to support
a consistent SAF supply chain, emphasising the need for government backing.
Sustainable Aviation Aotearoa (SAA)
30
SAA was established in 2022, as a public-private partnership (akin the to the UK’s Jet
Zero Council), to provide advice and coordination to accelerate the decarbonisation of
New Zealand’s aviation sector.
31
BARNZ is a member of both the Sustainable Aviation Fuels (SAF) working group, and
the Strategy working group, under the SAA structure.
32
The SAF working group is making progress in identifying the dif erent policy options
and what approaches other countries are taking towards SAF.
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33
The Ministry and the Ministry of Business, Innovation, and Employment (MBIE) are
considering how work on SAF should be reflected in the upcoming consultation
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document on the second Emissions Reduction Plan.
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Jet fuel resilience
34
Jet fuel supply has been raised by airports and airlines as an area of great concern.
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35
In September 2017, the pipeline that carries jet fuel from Marsden Point to Auckland
ruptured with no alternative route that could supply jet fuel quickly enough to meet
normal demand. Airlines flying out of Auckland Airport had to limit their use of jet fuel
to 30 percent of their usual usage, which caused significant flight disruptions.
36
There were further disruptions to jet fuel supply at Auckland Airport in December
2022 and Wellington Airport in April and December 2023. These were caused by jet
fuel imports not meeting fuel quality standards when tested on arrival. Many flights
were affected during the two Auckland Airport incidents, while there were fewer
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disruptions to flight schedules during the Wellington Airport incidents.
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37
BARNZ has emphasised the importance of New Zealand's jet fuel supply for
maintaining air connectivity. It has expressed concerns about the system's
vulnerability due to some imported fuel shipments not meeting quality standards.
38
MBIE is the lead agency for the fuel sector. MBIE led the development of the Fuel
Industry (Improving Fuel Resilience) Amendment Act 2023 (the Act), which provides
for the minimum fuel stockholding obligation (MSO). In March 2024, the Associate
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Minister of Energy announced an investigation into the feasibility of reopening
Marsden Point Oil Refinery.
39
From 1 January 2025, fuel importers wil be required to hold enough jet fuel in
New Zealand to provide 24 days of cover on average each month. For compliance
with this obligation, they can only count jet fuel stock in bulk storage tanks in
New Zealand or on a vessel in New Zealand’s Exclusive Economic Zone scheduled
for delivery to New Zealand.
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BARNZ supports the introduction of MSO for jet fuel suppliers and suggests
measures to boost resilience, such as increasing the stockholding requirement to
32 days, ensuring onshore stockholdings pass import acceptance testing, and
distributing storage requirements across the network.
Biography
Cath O’Brien, Executive Director of Board of Airline
Representatives NZ
Cath O’Brien, the leader of BARNZ, is a passionate advocate for
aviation recovery in New Zealand. With a regulatory background in
aviation and energy, she understands the needs of BARNZ members
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and effectively advocates for them, especially in matters of regulated
airport pricing. Prior to joining BARNZ in 2022, Cath spent five years at
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Air New Zealand as Head of Regulatory Af airs, where she worked on
legislative changes for sustainable aviation and navigated the Covid-19 response.
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Internationally connected, Cath has been a board member for Airlines for Australia and New
Zealand (A4ANZ) and maintains relationships with bodies like IATA. She holds a Masters in
Art History from the University of Auckland and has received executive education from the
London School of Economics and Harvard University.
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Annex 1: Talking Points
MEETING WITH BOARD OF AIRLINE REPRESENTATIVES NEW
ZEALAND
Infrastructure Investment Disputes
• What is the relationship like between airlines and Auckland Airport, given Auckland
Airport’s proposed investments?
Regulatory Changes
• Why do you think the benefits of moving to a negotiate/ arbitrate regime for airports would
exceed the costs of regulation?
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• What are the likely benefits of moving to an Individual Price-quality regulatory regime for
Auckland Airport?
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Strategic Leadership
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• How can we further strengthen the strategic leadership in aviation, building on the start
made by the Interim Aviation Council?
National Aviation Policy Statement
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• What key elements does BARNZ believe should be included in a national aviation policy
statement to address critical infrastructure needs?
Ohakea Airbase
• I have been briefed by of icials on the resilience challenges faced by the Air Force to
keep Ohakea airbase available as an alternative runway for international flights.
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• I note that the Air Force has made Ohakea available again as an alternative runway,
even though this is at restricted daily hours as an interim measure while more RFS staff
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are trained.
• What are your expectations for the ongoing use of Ohakea as an alternative runway?
Sustainable Aviation Fuel (SAF)
• How do your members plan to overcome the challenges associated with the high cost of
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SAF, and what support do they seek from the government in this regard?
Jet Fuel Resilience
• What specific measures does BARNZ propose to enhance jet fuel supply resilience and
how wil these measures address the system’s vulnerability?
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s 9(2)(f)(iv)
SPECIFIED AMOUNT SOUGHT
5
On 14 March 2024, the Authority provided you with a briefing noting that in order to
reduce passenger screening queues over the summer peak period, it had employed
temporary staff, increased overtime and reduced training and annual leave taken. The
additional financial cost incurred as a result was $1.5 mil ion as at 29 February 2024.
6
s 9(2)(f)(iv)
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COMPLAINTS ABOUT CERTIFICATION BACKLOGS
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In recent months you have received a number of complaints and concerns about
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workload pressures and growing certification backlogs across the CAA’s regulatory
business. This has included aircraft operators, which have commonly but not
exclusively been drone operators, who have lost business as a result of slow
processing times which they regard as being much slower than in other jurisdictions
such as Australia.
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8
s 9(2)(ba)(ii)
9
In its draft funding review proposals, the CAA has noted that average processing times
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have increased significantly since 2017/18, as il ustrated in the figure below.
s 9(2)(f)(iv) and s 9(2)(g)(i)
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TALKING POINTS
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FUNDING REVIEW
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You may wish to ask the Authority:
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• s 9(2)(f)(iv)
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• Have any business cases been prepared to clearly demonstrate the need for
additional investment in specific parts of the Authority and if so, what the
projected return on investment is expected to be?
11
COMPLAINTS ABOUT CERTIFICATION BACKLOGS
You may wish to ask the Authority:
INFORMATION
• What it is doing to monitor processing times for different types of regulatory
RELEASED
activities. Is this information regularly monitored and reported to the Board?
• What is the Authority doing to increase capacity in their frontline certification
functions? What is preventing them from doing more given that these activities
are intended to be cost recovered from fees and charges?
• How does the Authority intend to address the growing certification backlog
OFFICIAL
through its funding review? Specifically, which aspects of the proposals would
contribute to reducing the backlog? If there are no timeliness targets, how would
the Authority measure whether the additional investments have been effective?
• Whether the Authority has considered alternative options to speed up decisions,
such as delegating approval of low-risk activities to third party providers?
• Whether the Authority has looked at what has worked in the Australian
certification space?
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IN CONFIDENCE
Meeting with Carrie Hurihanganui, Chief Executive of Auckland International
Airport Limited
Key points
• In March 2023, Auckland Airport announced a $3.9 bil ion development plan, which
includes an integrated terminal for domestic jet and international services.
• Air New Zealand has expressed concerns about Auckland Airport’s proposed level of
investment, and believes this wil lead to increased aeronautical charges and potentially
unaffordable airfares for some passengers, which wil damage demand for air travel.
• Air New Zealand has lodged an official request with the Minister of Commerce seeking an
urgent inquiry into the regulation of airports under the Commerce Act.
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• As the Commerce Commission is stil assessing Auckland Airport’s pricing for the 2022 –
2027 price setting event, the Minister of Commerce has indicated he would await the
THE
conclusion of this process before deciding on whether to request an inquiry into whether
airports should be subjected to further forms of regulation.
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• You are scheduled to meet with Greg Foran, Chief Executive of Air New Zealand later in
the day following your attendance at the Regional Airport summit. Mr Foran is expected
to raise similar topics (see OC24027). UNDER
Auckland Airport Development Plan
1
In March 2023, Auckland Airport announced a $3.9 bil ion development plan, which
includes an integrated terminal for domestic jet and international services. The
terminal is due to open in 2028/29. This is part of a $6.7 bil ion 10-year roadmap of
which $5.7 bil ion would be recovered through airport charges.
2
Air New Zealand has expressed concerns about Auckland Airport’s proposed level of
INFORMATION
investment. The airline believes this wil lead to increased aeronautical charges. It
estimates charges will increase from $9 per domestic passenger today to $46 per
RELEASED
domestic passenger in 2032, which wil make flying unaffordable for some Kiwis
unless there is regulatory change.
3
Air New Zealand has put forward a non-integrated terminal development proposal
that it believes would reduce costs by $1 bil ion.
Auckland Airport believes these claims are inaccurate and misleading
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4
Auckland Airport disagrees with Air New Zealand’s claims. Auckland Airport maintains
that its pricing approach would result in prices considerably lower than the price path
Air New Zealand claims.
5
It projects an average domestic jet charge of $25 per passenger for the next pricing
period (2027 – 2032). This projection takes into account the capital investment plan
for the new terminal development. Between now and 2027, it projects that Auckland’s
domestic landing charges would increase on average by $1.76 per passenger,
bringing them in line with what Wellington and Christchurch charge today.
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6
Auckland Airport has stated that the cost of its development plans is consistent with
similar sized airports overseas, including:
•
Brisbane Airport, which is comparable to Auckland in terms of size, has plans to
invest over AUD 5 bil ion in terminal capital expenditure in coming years
•
JFK’s new Terminal 6, expected to open between 2026 and 2028, wil cost
around NZD 6.8 bil ion, with two fewer gates than planned for Auckland.
7
Auckland Airport notes that the alternative proposed by Air New Zealand would
provide a materially worse experience for customers, and would not meet basic
operational and aviation regulatory requirements. It also says that delaying progress
of the new terminal would result in large disruption to operations and would not allow
for operation of the contingent runway.
8
Lastly, it contends the Air New Zealand proposal would only reduce the capital cost
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by up to $100 mil ion, not $1 bil ion, and in turn only reduce domestic passenger
charges by $1 per passenger.
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Airport competition settings
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9
Since 2010, Auckland, Wellington and Christchurch airports have been subject to
information disclosure regulation under Part 4 of the Commerce Act 1986 (which
regulates markets where there is lit le or no competition).
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10
The Commerce Commission undertakes reporting and monitoring under the
Commerce Act, and the Minister of Commerce is the responsible Minister.
11
Information disclosure is the lightest form of regulation under Part 4. Airports must
disclose a range of information annually and at each five-yearly price-set ing event.
The Commission reports on the disclosed information but it does not have the power
to compel airports to change their prices.
12
Airlines have long argued for a move to negotiate/arbitrate regulation, which is the
INFORMATION
next step up the regulatory ladder under the Commerce Act. Airports would be
RELEASED
required to negotiate with airlines on prices and quality, and, if negotiation was
unsuccessful, to enter into binding arbitration.
13
Air New Zealand has lodged an official request with the Minister of Commerce
seeking an urgent inquiry into the regulation of airports under the Commerce Act, as it
believes the current regulation is failing to constrain overspending by Auckland
Airport.
OFFICIAL
14
Auckland Airport argues that the current Commerce Commission process should be
left to run. It believes Air New Zealand’s request to commence an inquiry would
undermine the role of the Commission and go around an established regulatory
process.
15
The Minister of Commerce has indicated he would wait for the conclusion of the
Commerce Commission’s process before deciding whether to request an inquiry into
whether airports should be subject to further forms of regulation.
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Lack of domestic competition
16
Auckland Airport maintains that Air New Zealand contributes to the increase in
domestic airfares due to having 86 percent market share. This position is also held by
NZ Airports.
17
Auckland Airport sees its investment in airport capacity, which wil add 26 percent to
domestic and additional aircraft stands, as important for keeping airfares affordable
by enabling more airline competition.
18
Data released by Stats NZ showed domestic airfares went up 7.4 percent in February
2024 compared to January 2024. Year-on-year domestic fares increased from
February 2023 by 7.7 percent.
19
Airports are calling for domestic airfares and airline performance to be disclosed to
provide greater transparency for consumers, amid record-high domestic fares.
1982
20
The Civil Aviation Act 2023 enables regulations to be made requiring information
disclosure by aviation sector participants, including passenger rights and performance
THE
data. Disclosing data could help increase transparency to aid consumer choice and
place downward pressure on airfares. However, given limited competition in the
ACT
domestic market, many customers wil not be able to make alternative choices.
Airlines, including Air New Zealand, have previously raised concerns about the
disclosure of this type of information, as they view it as commercially sensitive.
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Border agencies are working closely with Auckland Airport
21
The Border Executive Board (BEB) is an interdepartmental executive board made up
of the Chief Executives of the border agencies, including the Ministry of Transport
(the Ministry). The BEB was established to deliver an integrated and effective border
system.
22
The BEB has a specific interest in the operation of Auckland Airport. It is working
INFORMATION
closely with the airport to gain agreement on the design of the departure area and
arrivals hall of the new integrated terminal. Agencies, including CAA and Avsec, are
RELEASED
in the process of setting up a governance structure to support this work and reflect
border sector interests.
23
The BEB has regular engagement with Auckland Airport, and directly with its Chief
Executive. As previously advised, the BEB has raised concerns about the increased
congestion for international passengers at the arrivals area of the airport. Al border
agencies worked hard over the summer peak period to successfully address
OFFICIAL
congestions issues within their control. However, this resource-based approached is
not sustainable. Agencies are continuing to work with the airport on longer-term
solutions.
24
Your tour of the airport is likely to focus on the large infrastructure projects within the
airport precinct. Given the recent passenger facilitation issues, you may benefit from
seeing the international arrivals hal and departure area in action at short notice.
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Biography
Carrie Hurihanganui
Carrie Hurihanganui has been Chief Executive of Auckland Airport since
February 2022.
She joined the airport from Air New Zealand where she worked for 21
years, most recently in the role of Chief Operating Officer with
responsibility for pilots, cabin crew, airports, engineering and
maintenance, properties and infrastructure, supply chain, resourcing,
and airline operations teams.
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Annex 1: Talking Points
MEETING WITH CARRIE HURIHANGANUI, CHIEF EXECUTIVE OF
AUCKLAND INTERNATIONAL AIRPORT LIMITED
• How are your airport development and capital development plans progressing?
• What solutions are being explored to manage passenger congestion until the new
integrated terminal opens?
• Can we take the opportunity to see the international arrivals hal and departure area in
operation?
• How is the relationship between Auckland Airport and Air New Zealand and other airlines,
given recent media coverage about your proposed investments?
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ATTENDANCE AT REGIONAL AIRPORT SUMMIT
1
The New Zealand Airports Association (NZ Airports) is the peak industry body
dedicated to supporting New Zealand’s airports and the broader aviation sector.
2
NZ Airports represents 46 airport members in policy and regulatory processes to support
a safe, sustainable, and efficient aviation system for New Zealanders. NZ Airports also
has a strong focus on capability building and creating events and engagements to share
capacity and expertise across the airport network.
3
NZ Airports’ members range from our largest airports through to small aerodromes. Each
airport has unique challenges and opportunities based on its role in the air transport
network, geographic location, ownership structure and internal capability.
4
The Regional Airport Summit aims to respond to the Government’s economic objectives,
bringing together airport chief executives to discuss the barriers and enablers to lifting
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airport performance and delivering for our regions.
5
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The Summit is intended to identify the top actions that will ensure airports can deliver the
infrastructure and connectivity necessary to grow the regions over the next five years, as
well as “the major plays that could shift the dial in the long term”. ACT
6
The Summit expects to discuss the following themes:
•
Addressing the infrastructure deficit
UNDER
•
Streamlining agency support
•
Improving regional links and exports
•
Planning the future decarbonised network.
7
We provide some information below on matters that could arise during the roundtable.
INFORMATION
Regional airports are important to national connectivity, but face a number of
challenges
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8
Regional airports provide their communities with access to social and economic
services and opportunities, e.g., medical services, and freight and tourism
connections. Benefits to the country from good regional air connectivity can include:
•
economic network effects, including economies of scale and scope due to more
connections between consumers and producers
OFFICIAL
•
efficiency, as it can be cheaper for people to travel for services (such as
specialised or complex medical services) than to replicate the services locally
•
connectivity and opportunities for domestic travel and trade
•
resilience to emergencies and disasters.
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seek clarity on whether to invest in the significant infrastructure changes required to
accommodate the permanent screening of flights to regional airports. Unless there is
a regulatory requirement to implement regional screening, airports cannot include the
work required in their capital plans and pricing (paid for by airlines).
19
Introducing regional screening requires significant Crown investment in screening
equipment and resources to enable implementation and management across the
network, including more regulatory oversight. This includes personnel recruitment and
supply chain issues relating to sourcing of screening equipment. The cost of
implementation has been a significant barrier to successive governments making a
decision in this area.
20
s 9(2)(f)(iv)
1982
21
NZ Airports and its members may ask you for a clear direction from Government on
the implementation of regional screening.
THE
Decarbonisation of Aviation
ACT
22
Domestic aviation accounts for approximately six percent of New Zealand’s CO2
emissions. A collaborative effort from government and industry will be necessary to
decarbonise this sector.
UNDER
23
Several different new technologies are being explored by the industry to reduce
emissions. It is likely that a combination of technologies will be needed. This includes
Sustainable and Synthetic Aviation Fuels (SAF) (most likely targeting long haul
flights), liquid hydrogen (most likely targeting main domestic and potential trans-
Tasman routes), battery-electric (only likely to be appropriate for short haul/regional
flights due to power to weight limits of batteries), and hybrid approaches.
24
While a lot of focus has been placed on SAF as it can be utilised by existing fleets
INFORMATION
blended into existing jet fuel, next generation aircraft such as battery or hydrogen
powered aircraft could also have a near-term impact on regional travel. Air New
RELEASED
Zealand is heavily committed to its next generation aircraft project which is a key part
of the airline’s strategy to decarbonise its operations and fly next generation aircraft
on the domestic network from 2030.
25
In August 2023, Air New Zealand released an expression of interest to regional
airports to be home to its next generation aircraft. The airline is looking for airports
that wish to further support the decarbonisation of aviation and are motivated to take
OFFICIAL
on a leadership role in developing the infrastructure required to fly this technology. In
2022, MBIE commissioned research to examine the feasibility of placing a hydrogen
hub at an airport in New Zealand for trialling hydrogen and advanced aviation.
26
Airport infrastructure requirements to account for these technologies will be many and
varied. They might include onsite charging infrastructure (and associated connections
to the electricity system), fuelling and fuel transport infrastructure for new fuels like
hydrogen, and potentially onsite energy and fuel generation (for example
Christchurch Airport is building 150MW of onsite solar generation with Contact
Energy, and will investigate using this for hydrogen production).
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27
A key consideration for airports will be the timing of these new technologies entering
the aviation system, to plan upcoming infrastructure investments. For regional
airports, there may be choices about which technologies they wish to accommodate
as each technology has different infrastructure requirements.
Sustainable Aviation Aotearoa is examining the potential future infrastructure requirements
for zero carbon aviation
28
Sustainable Aviation Aotearoa was set up under the last emissions reduction plan as
an industry/government collaboration body to investigate what is necessary to
decarbonise aviation. The Ministry of Transport leads the government’s input into this
group, with MBIE supporting from both the energy and tourism portfolios. SAA has
three working groups focusing on strategy, SAF, and Zero Emissions Aviation. Both
the SAF and Zero Emissions Aviation groups are considering the airport infrastructure
challenges from new technologies.
1982
Energy requirements for a decarbonised sector
THE
29
Next generation aircraft require large amounts of green energy. For example,
electrifying New Zealand’s fleet of turbo-props, that fly most regional domestic routes,
ACT
could add 10 percent to the country’s current electricity demand.
30
The New Zealand Hydrogen Aviation Consortium estimated that producing liquid
hydrogen to decarbonise domestic aviation would require around 380MW of
renewable electricity generation capacity in 2035 and 765MW in 2050.2 Electricity
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generation would also be needed for any domestic production of synthetic aviation
fuels.
Support from agencies for new or restarting airports
31
Most of the regional airports are looking at growth opportunities, some of which
include international growth.
INFORMATION
32
International growth opportunities exist for several airports in the form of:
RELEASED
•
Private international flights with high-net-worth individuals wanting to fly directly
to locations who spend a significant amount per day, while often also investing
in New Zealand businesses.
•
Competing for aircraft maintenance contracts which require direct international
arrivals.
• OFFICIAL
Interest from operators in new Trans-Tasman links to regional airports.
33
NZ Airports and its members consider that some of these opportunities are being held
back by requirements of various government border agencies.
34
It wants to encourage a more enabling view of route development to support regional
airports with their connectivity projects.
2 Total installed electricity generation capacity in New Zealand in 2022 was 9,790MW.
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s 9(2)(b)(ii)
35
36
Border agencies are working through the Border Executive Board (BEB) to support
regional airports that are interested in receiving both non-scheduled international
flights and scheduled international flights. The BEB recognises that increasing non-
scheduled flights to new and restarting airports has regional economic benefits. The
major barrier for agencies is the associated start-up costs and sometimes unrealistic
timeframes that airports seek for establishing border services.
37
If a regional airport wishes to establish international services, agencies face financial
constraints and lead-in times to recruit staff and procure equipment. The costs of
establishing a new presence in a regional airport are high, and new operations are
not usually of a scale that would easily support recovery of the marginal cost of that
presence from the operator.
1982
38
While each agency has their own legislative and operational requirements, agencies
THE
are working together as a Border Sector through an interagency forum (PoFA –
Places of First Arrival). BEB has directed the PoFA forum to improve the coordination
ACT
of regional airports regulatory processes and to get a border system view of the
challenges agencies face in assisting regional airports.
39
This work has generated opportunities for agencies to share information and build
awareness of their respective regulatory requirements and contexts. This enables a
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more joined up way of working to support regional airports.
s 9(2)(b)(ii), s 9(2)(f)(iv)
s 9(2)(b)(ii), s 9(2)(f)(iv)
40
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41
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42
43
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Lack of domestic competition
44
NZ Airports notes that the greatest growth constraint on domestic connectivity is the
domination of Air New Zealand, with 86 percent of the market. Although smaller
airlines operate on niche routes, NZ Airports has commented that the commercial
practices and sheer scale of Air New Zealand makes it difficult for them to grow
beyond these.
45
NZ Airports argues this lack of competition in the domestic market has contributed to
increasing airfares (up an average of 34 percent compared to last year)3 which has a
dampening effect on demand, particularly in the regions. Cancellations and a
deterioration in on-time performance have also contributed to lower confidence from
regional travellers.
46
Data released by Stats NZ showed domestic airfares went up 7.4 percent in February
2024 compared to January 2024. Year-on-year domestic fares increased from
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February 2023 by 7.7 percent.
THE
47
NZ Airports is calling for domestic airfares and airline performance to be disclosed to
provide greater transparency for consumers, amid record-high domestic fares.
ACT
48
The Civil Aviation Act 2023 enables regulations to be made requiring information
disclosure by aviation sector participants, including passenger rights and performance
data. Disclosing data could help increase transparency to aid consumer choice and
place downward pressure on airfares. However, given limited competition in the
UNDER
domestic market, many customers will not be able to make alternative choices.
Airlines, including Air New Zealand, have previously raised concerns about disclosure
of this type of information as they view it as commercially sensitive.
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3 Air New Zealand dispute this figure as not including online and Grabaseat airfares.
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Biographies
Billie Moore (Chief Executive)
Billie has been Chief Executive since December 2022. She
has extensive government and stakeholder management
experience. Billie is a former diplomat and served as
New Zealand’s Consul-General to New South Wales and
Queensland for four years. She returned to Wellington in
2019 to lead government relations for Tourism New Zealand,
including joining its executive team during the response to
Covid-19.
Prior to her current role, Billie was chief adviser at the
Ministry for the Environment, working with the chief executive
and executive team across the Ministry’s engagement and
key relationships.
1982
THE
Matt Clark (Chair)
ACT
Matt has over 20 years’ experience in the airport industry,
during which time he served as the Chief Executive of
Rotorua Airport, before joining Infratil’s airport team in
Europe. He has been at Wellington Airport since 2010 as
Chief Commercial Officer, before taking over as Chief
UNDER
Executive in 2022. Matt holds a Bachelor of Commerce
degree from the University of Canterbury, and has completed
post-graduate studies at Melbourne Business School and the
New Zealand Institute of Directors.
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UNCLASSIFIED
Meeting with Wel ington International Airport
Key background
• Wellington International Airport Limited (the Airport) is jointly owned by Infratil (66 per
cent) and Wellington City Council (34 per cent).
• In the 2023 financial year, the Airport handled close to 4.7 mil ion domestic passengers
and 563,500 international passengers.
• In the same period, the Airport made a net profit after tax of $25.2 mil ion.
• The Airport reports that it generates economic output of around $2 billion, supporting
11,000 jobs.
1982
The Airport supports an additional Mount Victoria tunnel and improvements to
the Basin Reserve
THE
1
The Airport has continually expressed support for an additional Mt Victoria tunnel and
ACT
improvements at the Basin Reserve, as supported by its polling which showed strong
local support for these at 76 per cent and 81 per cent in favour respectively.
2
s 9(2)(ba)(i)
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3
4
s 9(2)(g)(i)
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The Airport supports more transparency and monitoring of airfares
5
In his post-election letter to you, Mr Clarke noted the need for more transparency and
monitoring of airfares for consumers, given airfares have increased notably in recent
years. Mr Clarke further noted that unlike other countries, there is very little data
OFFICIAL
available to the public on this in New Zealand.
6
The New Zealand Airports Association (NZ Airports), the representative body for
New Zealand’s airports, has noted that the greatest growth constraint on domestic
connectivity is the domination of Air New Zealand, with 86 per cent of the market.
Although smaller airlines operate on niche routes, NZ Airports has commented that
the commercial practices and sheer scale of Air New Zealand makes it dif icult for
them to grow beyond these.
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7
NZ Airports argues this lack of competition in the domestic market has contributed to
increasing airfares (up an average of 34 per cent compared to last year)1 which has a
dampening effect on demand, particularly in the regions. Cancellations and a
deterioration in on-time performance have also contributed to lower confidence from
regional travellers.
8
NZ Airports is calling for domestic airfares and airline performance to be disclosed to
provide greater transparency for consumers, amid record-high domestic fares.
9
The Civil Aviation Act 2023 enables regulations to be made requiring information
disclosure by aviation sector participants, including passenger rights and performance
data. Disclosing data could help increase transparency to aid consumer choice and
place downward pressure on airfares. However, given limited competition in the
domestic market, many customers wil not be able to make alternative choices.
Airlines, including Air New Zealand, have previously raised concerns about disclosure
of this type of information as they view it as commercially sensitive.
1982
10
The Ministry wil report to you on options for aviation sector performance data, and
THE
the potential for airfare disclosure, as part of your aviation priority programme.
Aviation decarbonisation
ACT
11
Domestic aviation accounts for approximately six per cent of New Zealand’s CO2
emissions. A collaborative effort from government and industry wil be necessary to
decarbonise this sector.
UNDER
12
Several different new technologies are being explored by the industry to reduce
emissions. It is likely that a combination of technologies wil be needed. This includes
Sustainable and Synthetic Aviation Fuels (most likely targeting long-haul flights),
liquid hydrogen (most likely targeting main domestic and potential trans-Tasman
routes), battery-electric (only likely to be appropriate for short haul/regional flights due
to power to weight limits of batteries), and hybrid approaches.
13
Airport infrastructure requirements to account for these technologies wil be many and
INFORMATION
varied. They might include onsite charging infrastructure (and associated connections
to the electricity system), fuelling and fuel transport infrastructure for new fuels like
RELEASED
hydrogen, and potentially onsite energy and fuel generation.
14
The Airport is working closely with airlines on plans for electric aircraft and alternative
fuels. The Airport recently partnered with three businesses to trial using hydrogen in
an aviation setting for the first time in New Zealand.
15
The trial saw the three businesses2 join forces with the Airport to trial using hydrogen
OFFICIAL
to charge Air New Zealand’s electric tugs and service vehicles at the Airport.
16
The trial wil help assess the viability of hydrogen for charging and give a good insight
into the operational challenges and opportunities for all involved.
17
The Airport participates in Sustainable Aviation Aotearoa which is examining the
potential future infrastructure requirements for zero carbon aviation.
1 Air New Zealand dispute this figure as not including online and Grabaseat airfares.
2 Air New Zealand, Toyota New Zealand and Hiringa Energy.
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18
On 17 April 2024, Air New Zealand, the Airport and Marlborough Airport jointly
announced that the airline wil commence, in 2026, cargo-only flights for NZ Post
between Wellington and Blenheim using an all-electric ALIA CTOL aircraft. Mr Clarke
is quoted:
Partnering with Air New Zealand to host the commercial demonstrator is
a giant leap for sustainable aviation, providing the basis for all airports to
prepare for the next generation of aircraft technology. Our team put their
heart and soul into the hosting bid and that same energy wil now be
focussed on getting this service off the ground.
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Annex 1: Talking Points
MEETING WITH WELLINGTON INTERNATIONAL AIRPORT
Mount Victoria / Basin Reserve roading improvements
• I appreciate your support for the additional Mt Victoria tunnel and Basin Reserve
improvements. It is also good to see the level of local support your polling has
demonstrated for these projects.
• You wil have seen my recent announcement that, while planning continues on the
duplicate Mt Victoria tunnel and Basin Reserve project, the Government has also
asked NZTA to consider and provide advice on a Long Tunnel option.
• The Long Tunnel option has the potential to deliver up to 15-minute travel time
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savings between the region and Wellington airport, compared to around 2-3 minutes
for the current parallel or diagonal tunnel proposals at Mt Victoria and the Basin.
THE
• I’m looking forward to receiving advice from NZTA on the technical feasibility, cost,
ACT
and funding and financing options for all tunnel options.
• NZTA wil seek Wellington Airport’s input once further work on the project begins in
the second half of 2024.
• I welcome your thoughts on these projects, and on how we could improve public
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transport to the airport.
Airfares
• When the Civil Aviation Act 2023 comes into force next April it will enable regulations
to be made requiring information disclosure by aviation sector participants, including
airfares, passenger rights and performance data.
• I am interested in your views about the priority and likely impact of disclosure of
INFORMATION
airfares, given the limited competition in the domestic market.
RELEASED
Decarbonising aviation
• I am particularly interested in the hydrogen trial that was undertaken at Wellington
Airport
• What are the key findings of the trial?
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• What are the challenges and opportunities that were identified?
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Meeting with Jon Duffy, Chief Executive of Consumer New Zealand
Key points
• Consumer NZ is an independent, not-for-profit organisation, representing consumer
interests and rights.
• Flight rights, a Consumer NZ campaign, is asking airlines to provide better information on
rights of disrupted passengers when a flight is delayed or cancelled.
• Specifically, Consumer NZ has called for developing regulations under Civil Aviation Act
20231 (2023 Act), requiring information disclosure by airlines on passenger rights.
Consumer rights are addressed under existing legislation and terms of 1982
carriage
1
When a flight is cancelled or delayed in New Zealand, the remedy avai
THE lable to the
disrupted passenger is largely determined by the terms of their contract with the
airline. The right to refund also depends on whether it was the airline’s fault or not and
ACT
whether the passenger is flying domestically or internationally.
2
The Civil Aviation Act 1990, Consumer Guarantees Act, Contract and Commercial
Law Act and Fair Trading Act can come into play.
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3
Passengers are entitled to a refund if a domestic flight is cancelled or delayed for
reasons within an airline’s control such as staffing, operational or mechanical issues.
Under the Civil Aviation Act 1990, passengers are entitled to reimbursement of up to
10 times the cost of the air ticket, or the actual cost of delay, whichever is lower.
4
Airlines are not required to refund or reimburse costs if a domestic flight is cancelled
or delayed due to a reason outside of their control such as a weather event or a
mandatory government shutdown. In this case, a passenger’s right to refund or
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compensation wil depend on the type of airfare that they bought and the airline’s
terms and conditions.
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Airlines offer a range of fare types, the more expensive of which allow the consumer
to obtain a refund regardless of the reason for cancellation or delay. If a consumer
chooses a cheaper fare, and the flight is cancelled due to circumstances beyond the
airline’s control, the airline may offer a credit instead of a refund.
6
The COVID-19 global pandemic and subsequent travel restrictions resulted in
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unprecedented numbers of flights being cancelled. Many passengers found
themselves unable to access cash refunds for their cancelled flights, receiving flight
credits instead. Airlines were subject to criticism from the public, media and consumer
advocacy groups regarding their cancellation and delay policies.
1 The Civil Aviation Act 2023 wil come into force on 5 April 2025. It replaces the Civil Aviation Act
1990 and the Airport Authorities Act 1966.
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Consumer NZ has been advocating for better consumer protection for airline
passengers
Consumer NZ’s flight rights campaign
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Consumer NZ’s Flight Rights campaign is asking airlines to be transparent about
passenger rights when a flight is delayed or cancelled. Through the campaign,
Consumer NZ is advising passengers on their rights when travelling and their
entitlement when flights are delayed or cancelled, including the right to
reimbursement.
8
Consumer NZ has called for airlines to provide accurate and consistent information to
passengers when their flights are disrupted. Air New Zealand and Jetstar have since
updated their websites to provide better information for disrupted passengers.
9
Consumer NZ has been critical of expiration of unspent Covid credits. Covid credits
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were issued to consumers who purchased non-refundable airfares for flights that
could not be flown due to travel restrictions during the COVID-19 pandemic.
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In 2023, Consumer NZ lobbied Air New Zealand to drop the expiry dates on
outstanding Covid credits worth more than $200 mil ion and refund passengers who
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applied for reimbursement. Air New Zealand has now extended the expiry date on
Covid credits by two years, until 31 January 2026.
11
Consumer NZ also campaigned for Air New Zealand to remove the 14-day timeframe
from its reimbursement policies. This 14-day rule claimed that the airline is not liable
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for any costs passengers incurred because of flight changes within their control if they
provided at least 14 days’ notice of the changes. Air New Zealand subsequently
removed the 14-day rule from their reimbursement policies.
Consumer NZ is cal ing for development of regulations under Civil Aviation Act
2023 to promote passenger rights
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The Civil Aviation Act 2023 (section 410) enables regulations to be made requiring
information disclosure by aviation sector participants. These can be made once the
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Act comes into force in April 2025. Disclosing information on passenger rights could
help increase transparency to aid consumer choice and assist passengers in seeking
recourse in the event of delay or cancellation.
13
The Airports Association has also called for regulations to be used to increase
transparency of airfares, to provide visibility on cost drivers and assist consumer
decision-making.
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14
s 9(2)(f)(iv)
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Consumer NZ is now also calling for a market study into aviation
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Following Air New Zealand’s recent increase in airline prices for domestic travel, Mr
Duffy made cal s for a Commerce Commission market study to look at how airline
prices are set.
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Mr Duffy noted that whilst some price increase is justified, at least in part, due to
higher fuel prices and wages, more transparency is needed in how airline travel
prices are set in New Zealand.
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Mr Duffy noted that whilst a market study wil take some time, it is the best way to
establish all the factors affecting pricing and the level of competition. This wil
establish whether travellers are getting a fair deal from airlines.
18
The Minister of Commerce can require the Commission to carry a market study
(called a competition study in the Commerce Act) if the Minister considers it to be in
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the public interest to do so.
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Annex 1: Talking Points
MEETING WITH JON DUFFY, CHIEF EXECUTIVE OF CONSUMER
NEW ZEALAND
Flight rights campaign
• How is your Flight Rights campaign progressing?
• Have you had any discussions with the Minister of Commerce on your proposal for a
market study into aviation?
Regulations on airline information disclosure under Civil Aviation Act 2023
• I have been briefed by of icials on the work currently underway to implement the Civil
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Aviation Act 2023. The 2023 Act is a large piece of legislation and implementing key
provisions in two years requires a massive effort.
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• I note that the Ministry is currently prioritising system-critical provisions in implementing
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the new Act. This is to ensure safety and business continuity of the aviation sector, with
the intent to implement additional system-enhancing provisions overtime.
• Developing regulations under the 2023 Act requiring airlines to disclose information
including passenger rights requires substantive cross-government policy work. At this
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stage, this remains a medium-term priority to be implemented after the 2023 Act comes
into force on 5 April 2025.
Non-regulatory approaches to promote airline passenger rights
• Do you think there is any scope for encouraging airlines to compete on service to
provide better consumer protection in the face of flight delays and cancellations?
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Document Outline
