Auckland Airport plans to spend $1.8 billion over the next five years on a second runway and expanded international and domestic terminals, which it plans to pay for with extra charges.
The company says the upgrades are needed to cope with a 26 percent rise in passenger numbers in the past three years. The number of international airlines had increased by 61 percent in the past 22 months.
Auckland Airport was already spending $1 million a day in aeronautical infrastructure.
A new domestic terminal will be built and domestic passenger charges will be raised by 0.8 percent. The company plans to upgrade and expand the existing international terminal, but international passenger charges will fall an average 1.7 percent over the next five years.
It will introduce a new runway landing charge of $1.19 per passenger from July 2020 when it expects to confirm the construction of the second runway.
"Today's announcement is the result of a 17-month consultation with airlines and the airport community on the form and function of our future aeronautical infrastructure," said Auckland Airport chief executive Adrian Littlewood.
The airport charges airlines for aeronautical services, such as terminals and other infrastructure, which are reflected in airfares.
The new pricing is expected to provide a return on investment of 6.99 percent, and is subject to a review by the Commerce Commission.
"The average domestic charge will be well below average for Australasian airports and our international charge will continue to be middle of the pack, compared with other airports around the world, served from Auckland Airport," Mr Littlewood said.
The infrastructure spending includes three more gates for international aircraft, an improved international arrival hall and check in area, as well as investment in public transportation.