Air NZ fights Dubai's Auckland bid

"The owner of Auckland International Airport Ltd (AIA) should not be linked in any form to an airline, so that there is no possibility of preferential treatment of any kind that would disadvantage any other operator," Air New Zealand chairman John Palmer said.

"Air New Zealand intends to make a detailed submission to the Overseas Investment Commission."

DAE is making a takeover bid for AIAL and has said it is prepared to pay $3.80 per share - or $2.3 billion - for a 51 per cent stake in the nation's largest airport.

The government last year loosened requirements for foreigners' land purchases over $10 million to be checked by the OIC. Since it axed the 32-year-old OIC and replaced it with an Overseas Investment Office, approval has been given for the sale to foreigners of $16 billion worth of New Zealand assets, including about 170,000 hectares of freehold land.

Outside the sensitive areas of such as foreshore and seabed, or heritage land, checks are no longer required on large land purchases to be approved and there is a threshold of $100 million before corporate transactions need consent.

Set up last year by the Dubai Government with war chest of $US15 billion ($NZ20 billion) DAE's combined government and private investment vehicle is chaired by Sheikh Ahmed bin Saeed al Maktoum, who also happens to also chair Dubai-based Emirates, the world's eighth largest airline.

Emirates has ambitions to set up a secondary hub in Auckland to stage into the West Coast of the United States - something commentators say would be bad news for Air New Zealand.

Mr Palmer made his announcement alongside a statement that Air New Zealand is seeking a judicial review in the High Court at Auckland of planned landing fee increases by AIAL.

Earlier this month the airport said it would increase landing charges for airlines by 2.5 per cent a year for the next five years, with the first rise taking effect on September 1, and boost its $25 departure tax - a development charge levied on passengers - by $1 a year for three years from July 1, 2008.

Air New Zealand said AIAL was abusing its position as a monopoly to levy taxes at will on airlines and the travelling public: the landing fee increases of 13 per cent over five years would add millions of dollars of cost to travellers, for no benefit.

In a separate statement, Mr Palmer said Air New Zealand's position on the "foreign ownership of this strategic national asset" had been the subject of considerable interest by both politicians and investors.

He said the ownership of AIAL is a matter for its shareholders, though it is also expected that Associate Finance Minister Trevor Mallard and Land Information Minister David Parker will have to sign off on the Overseas Investment Office's decision as sensitive waterfront land is involved.

"All that Air New Zealand seeks is an effective regulatory framework that ensures an end to the monopoly abuse that sees travellers and airlines using this important gateway to our nation being burdened with excessive charges," said Mr Palmer.

AIAL was generating approximately $90 million a year in "excess revenue", he said.

New Zealand airports had a statutory right to set charges as they saw fit, and the Australian Productivity Commission had described New Zealand as having no airport regulation.

"The possibility of a statutory right to set charges as thought fit - which is in itself unique for a private sector company - passing to a foreign controlled company is untenable," Mr Palmer said.

Australia had regulations preventing a single foreign company owning more than 15 per cent of an airport as well as prohibiting a party associated with an airline owning more than 5 per cent of an airport.

Air New Zealand declined further comment on the issue, but the nation's Board of Airlines (BARNZ), which represents 27 airlines, said it had not reached a conclusion about any of the potential bidders.

"There's so many areas of uncertainty and so many areas of concern that we can't really develop a view until those clarify," executive director Stewart Milne said.

The association, also a vocal critic of Auckland Airport's decision to raise the fees it charges airlines, said its main concern was that a buyer who paid top dollar for the company would want to recoup its investment through increased charges.

In 2002 the Commerce Commission released a report on pricing of airfield activities which found Auckland International Airport had overcharged airline customers by millions of dollars a year.

The commission recommended that price controls be imposed on Auckland Airport but not on Wellington or Christchurch airports.