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Air New Zealand has slammed a 78% rise in Dunedin International Airport user charges as profiteering at the expense of passengers.
From Friday, fares will rise by up to $4 from the airport, which is now claimed to be the second most expensive airport in the country for Air New Zealand planes.
"We are uncomfortable with such a massive increase, which we do not believe is justified," Australasia operations general manager Glen Sowry said.
The increase worked out at $1.8 million a year.
"We made it clear at the time of the consultation with the airport company that we were very uncomfortable with the charges being proposed."
The airline had increased domestic passenger numbers in and out of Dunedin and it was "disappointing Dunedin airport is now penalising us and the travelling public with increased per-passenger costs".
A softening in demand from price-sensitive customers was likely to result in jet services being replaced with smaller ATR aircraft, Mr Sowry warned.
"We are forced to pass those costs on to the travelling public, and ultimately we know from extensive experience that that will result in a suppression of demand for travel."
Since December, the airline had absorbed the increases at a time when fuel costs had added an extra $5 to the average one-way fare from Dunedin.
The airline also criticised the Dunedin airport company's investment "in significantly more infrastructure than what was required when they built the new terminal ... and we continue to hold that view very firmly".
Mr Sowry warned the rises could hit tourist numbers.
Dunedin Mayor Dave Cull referred comment to the airport company, and chief executive John McCall issued a single-sentence statement: "Following the completion of full consultation with its airline customers, in accordance with the requirements of the Airport Authorities Act, Dunedin International Airport Ltd applied revised landing charges from 1 December, 2011."
Mr Sowry said Wellington Airport had announced a 54% increase in charges to airlines and questioned why airports were increasing charges above inflation.
"Inevitably, these costs will need to be passed on in the form of fare increases to consumers. Unfortunately, our customers in Dunedin are also likely to face further fare increases as a consequence of the actions of other airports around the country."
The airline wanted airport regulation strengthened to prevent such "profiteering" and said the Government should act
The cost of flying
• Air NZ operates 101 Dunedin return trips a week.
• Mainly 133-seat Boeing 737 and 68-seat ATR.
• Charges last raised 2001.
• Airport company now charges $1391 for a Boeing 737, $521 for an ATR, and $1768 for an A320.
• Dunedin-Wellington and Dunedin-Christchurch services fares rise $3 each way. Dunedin-Auckland goes up $4 each way.
• Stand-by fares will also rise $3-$4.
• The rise amounts to an average of 7% a year, Air NZ says. Average fare increase over same period put at 1.4%.