11 November 2011

PMR's Departure Tax Departing

Palmerston North Airport's loathed $5 departure tax is on the way out. From October next year, the domestic departure levy will be no more, and the costs will probably be absorbed into air fares. Airport chief executive Garry Goodman said the change had been a long time coming. "If there had been no objection, we would have done this quite a while ago.'' The tax was initially a levy for development at the airport, but also allowed it to charge cheaper landing fees to airlines. Mayor Jono Naylor said removal of the levy was a great outcome that would be welcomed by locals as well as travellers from out of town. He said having to buy the levy separately was an extra step in the process for travellers, and was an irritation. "And the more reasons we can remove for people giving us a hard time, the better.'' Palmerston North has been the butt of negative publicity about the tax, with entertainer Gary McCormick campaigning vigorously against it. The company proposed dumping the levy when it last reviewed its aeronautical pricing in 2003 but was convinced by Air New Zealand to keep it. However, this time, after 18 months of formal consultation, the airport company has decided to throw out the tax. "They [the airline] have not necessarily agreed with us,'' said Mr Goodman. "It was a consultation process, and we needed to understand the implications for all parties, and that has occurred.'' Mr Goodman said the key concession the airport company had made was to delay removal of the tax. ``The timing was a major issue to resolve.'' Understanding that some tickets were sold well in advance, the company had given airlines time to consider how to cover their increased costs. Needing to find more revenue, the airport could have increased the departure tax, but chose to ramp up landing fees instead. Landing charges are going up by 17 per cent from December, the first time since 2005. Those increases will bring in 10 per cent more income, the equivalent of 50c for every arriving and departing passenger. And from October 2012, the levy will be fully incorporated into landing charges. "Passengers will still be paying it for the next 11 months, and the cost to the passenger will still be there, depending on what the airlines do about it. "But the irritation factor will be gone.'' Mr Goodman said the number of direct complaints airport staff received about paying the departure levy had dropped away. "But we are in touch enough with people in the community that we know there is a strong feeling against it.'' It was recognised that having to pay the levy separately annoyed people. Two things had tipped the company's resolve to ditch the levy this time around. One was that the extra $5 per passenger had become a less significant portion of total costs. The other was that the reason behind the levy's introduction in 1990 helping to pay for upgrades to the terminal building no longer applied. The levy was now treated as part of general revenue, not separately earmarked for special projects. Mr Goodman said once the changes were complete, the airport company would still be earning revenue that was below a normal commercial return. However, it balanced profits against its desire to keep prices down and keep the airport competitive with other New Zealand centres. Mr Goodman said the decision could not be appealed. The only grounds for a challenge would be that the company had not carefully followed the process for consultation, and he believed it had done that.

No comments:

Post a Comment