Airways New Zealand has today confirmed new prices for its air traffic management services provided to airline and general aviation customers for the next three-year cycle.
Every three years Airways consults with its customers and stakeholders on enhancements to its services and associated service prices. Consultation with customers on the new prices commenced in April, following the company’s review of its Service and Pricing Frameworks.
Two years of COVID-19 travel disruption, followed by increasing global economic pressures, mean New Zealand’s aviation industry continues to operate in an extremely challenging environment, Airways’ Acting CEO James Young says.
“Our focus is on supporting the industry’s recovery and we have limited our price increases for the next three years as far as possible, while ensuring we are able to continue delivering on our core objective of providing safe and efficient services,” he says.
Airways is normally fully self-funded through fees it charges airlines and other commercial activities. Its air traffic management (ATM) revenue is directly related to the volume of air traffic it manages. With the support of the Government as its shareholder, Airways will not be seeking full recovery of ATM revenue for the 2022-2025 period to ensure recovery is in step with the industry.
Following consultation with the industry, Airways is assuming a three-year air traffic volume recovery scenario. This is broadly aligned with recovery patterns seen internationally when COVID-19 restrictions have been removed.
Based on the recovery outlook, prices for airlines will increase by an average of 8% in FY23 and an expected total of 20.2% over the three-year period. General Aviation prices will increase by 8.8% over the period, in line with underlying costs.
Recognising that there is still a high level of uncertainty around the recovery outlook, Airways will consult with stakeholders on completing an out-of-cycle price reset at the end of 2022. This will account for any traffic level change that may impact prices.
“Airways has limited price increases to the extent reasonably possible to stay within our equity and funding parameters. After four years of losses, a pathway back to profit is a requirement for the shareholder as well as external funders,” Mr Young says.
Looking ahead beyond the recovery, Airways’ focus will be on the development of a future-fit air traffic network that is safe, resilient and even more efficient and sustainable. Airways’ capital plan over the three-year period will see new systems and technologies deployed that advance these objectives.
The new prices take effect on 1 August for a three-year period to 2025.
The final prices and Airways’ response to customer feedback are outlined in the consultation response document. A copy of the full document can be found here our website.