Why are airport taxes and service charges so high on Trans Tasman flights between New Zealand and Australia?
Air New Zealand has a sale on flights to Australia today. There is nothing amazing about that – these days it’s something that happens almost as a regularly as a sale at Briscoes.
I happened to notice a few comments on social media this morning from people complaining about the cost of return flights from Australia. Air NZ advertise flights to Australia for $149, but make no mention of the price of the return flight – and that’s not surprising, because it’s a lot more than $149.
Here’s an example of a return flight to Sydney from Wellington with flights for $149 to Sydney, and $209 back.
The first obvious conclusion for those that don’t understand the aviation industry is that Air New Zealand are blatantly ripping off customers – but the reality is far from that.
When you look at the breakdown of that $149 flight, $62.40 of it is actually tax and service charges. This is a combination of New Zealand departure tax, and the Australian arrivals charge.
For the return $209 flight, $122.56 is tax and service charges. This is a combination of Australian departure tax, and the New Zealand arrivals charge.
So from a $358 airfare, $184.96 is simply tax and service charges that’s collected by Air New Zealand and paid to both Australian and New Zealand Governments. That’s over 50% of the total cost on a entry level special fare. When you see airlines offering airfares under $100, that’s not enough revenue for the airline to actually pay for the fuel that you’ll burn.
As a comparison it’s only $156.96 in tax and service charges if you head off on a cheap Air New Zealand special to Los Angeles to visit Disneyland and stop by for a world famous 4x4 burger and animal fries at In-n-Out burger.
There has been plenty of talk from both Governments in recent years about improving the Trans Tasman experience for passengers, and talk of pre-clearing Customs and Immigration before hoping on the plane. While it would be nice to see this, one can only live in hope that one day we might see these charges actually drop rather than continue to rise.
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Comment by Technofreak, on 12-Jul-2016 20:51
It's a sad commentary on the costs of bureaucracy when the taxes exceed the cost of a product like an air fare.
Comment by blakamin, on 13-Jul-2016 00:12
I used to hate the days when you had to pay departure tax separately at welly airport.
I also can't wait for the days when it drops. Or I'll end up giving more to the govts than to Qantas when my daughters come to Adelaide from WLG twice a year.
Comment by olivernz, on 14-Jul-2016 14:32
Well don't hold your breath. In Wellington this will rise as soon as the runway extension is built. That's why they are building it! Not because they want more long haul. that's only the excuse. they want it so they can cherge more "TAXES" for EVERY flight. And you thought it had something to do with growing something else than Infratil's pockets????
And by the way it's called taxes but a big part of it aren't. They are the Airport charges. This is money that goes to private enterprise and is not a tax.
Comment by Linuxluver, on 27-Jul-2016 17:10
I thought these charges were higher because Aussie was dumb enough to invade Iraq to get a free trade agreement with the US.....so we all have to pay for more security.
Plus someone thought user-pays was a great idea and started lumping fees on travellers.
Comment by henareho, on 16-Aug-2016 15:31
Thanks Steve, I find standard fares from NZ to Oz fairly poor so good to get the breakdown on where that money is going. But that passenger movement charge, yeah thanks Aussies!
Comment by kinsten, on 19-Aug-2016 14:02
I suppose without those 'taxes' or airport fees, the ports would not exist, as the running costs for such a facility must be insanely expensive. The land area, power, security, safety teams, air control staff, general cleaning staff, management etc. Not to mention ongoing building maintenance & runway resurfacing costs.
Just like any business they are around to provide a service & to make a profit. But I would hate to see what sort of expenses they must have to outlay and prepare for.
Although back when Airports used to only function as an Airport, without a lot of cafe's, retail shops, Duty Free, vending machines and parking lots. They perhaps were only covering expenses. Where as now they have many more revenues for income.