Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
1.B. Flexible Contingent Runway (FCR)
CONSULTATION PROCESS
AIRWAYS PROPOSED AIAL has commissioned a project to convert Taxiway Alpha into an FCR that can be enacted within 30 minutes. This will significantly improve the resilience of Auckland operations by providing an alternative runway at Auckland Airport in the event the main runway is unusable. The FCR will also allow routine maintenance on the main runway overnight without significantly impacting your operations. Airways has made a provision to implement and own the significant aeronautical ground lighting assets associated with the FCR. Airways proposed a capital spend of $32.6m which included supporting investments in a new power centre, remote international stands and an extension of Taxiway Mike. The assets will be depreciated over a useful life of 15 years, recognising that the FCR will still be available for use when the proposed northern runway is operational. During the implementation of the FCR there are additional operating costs of $0.9 million p.a. SUMMARY OF SUBMISSIONS Airlines had mixed views about the concept of an FCR, ranging from broad support (Qantas Group), to opposition (Virgin). All airlines questioned the lack of a cost benefit analysis from AIAL. BARNZ, Qantas Group and Virgin welcomed investigation of alternatives including periodic, well notified, night-time runway closures. NZ Airports supported the project. BARNZ noted that AIAL is due to review the FCR investment and submitted if the project does not proceed Airways should remove the costs from prices. BARNZ also suggested a mechanism to review the price path at the end of FY20 and FY21 if a clear decision is not reached by AIAL before Airways’ prices are set. BARNZ offered to help develop a price reset mechanism, and provided an example of the Commerce Commission’s capex wash-up adjustment for electricity companies. The concept of a price adjustment mechanism was also supported by the Qantas Group, while IATA suggested the cost should be removed until the cost benefit analysis is known. Air NZ has asked Airways to consider other pricing mechanisms to match the delivery to the charging start date. Air NZ cited Airways’ Cat III and Queenstown multilat charges as examples of when this has been done in the past.
EXECUTIVE SUMMARY
PART A AIRLINES
PART B GENERAL AVIATION
APPENDIX 1 PRICING TABLES AND EXAMPLES
APPENDIX 2 SUPPORTING INFORMATION
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