Auckland Airport is spending $300 million on a transport hub and setting aside land for light rail near its international terminal.

The company is also installing a $100m new smart baggage hall and system designed to transform luggage handling as part of a planned combined domestic and international terminal.

Built to double height, the ground floor of the four-storey building will accommodate buses as well as cars, with the upper floors featuring smart car parking, electric vehicle charging stations and office spaces. It will also house an office building.

The first part of the project, a drop-off and pick-up area will be finished later next year.

Another part of the transport hub area could accommodate rapid transit such as light rail if that is the preferred Government and Auckland council option. The airport had taken steps to set aside land for an integrated mass transit station, while the inner forecourt road will remain dedicated to buses and commercial transport.

The airport's chief executive Carrie Hurihanganui said the new transport hub would be funded by debt and was being started now as passenger numbers recovered.

Artist impression of the new transport hub at Auckland Airport. Image / Supplied

''It's a little bit back to the future because we had great plans underway and then Covid made all of us stop and pause and rethink things. But - in effect, we're starting a new chapter.''

While the transport hub is being built the 750-space Car Park A is closing from June 8 and all public car parking (short and long term) is relocating to car parks D and E. They are a five-minute to 10-minute walk from the terminal and Hurihanganui said they would be cheaper than the existing main car park because they were further away.

There would be more than 750 spaces in the new transport hub multi-storey building.

''It will place existing and future public transport at the heart of Auckland Airport and create a seamless arrival and departure experience for passengers, with a direct connection to the combined international and domestic terminal," she said.

The project is also the critical initial step in enabling the long-planned new combined domestic and international terminal, a $1 billion project. She said the speed of airline recovery would dictate when work on the replacement domestic terminal started and it would take about five years to build.

Along with the Transport Hub, major developments include demolition of the international terminal's eastern baggage hall will take place, making way for the development of a high-tech baggage handling system that will transform the way travellers' luggage is managed.

"Everyone wants a smooth journey through the airport system, especially when it comes to dropping off and picking up their checked-in baggage quickly and easily," said Hurihanganui.

Passengers would be able to check bags in well ahead of check-in now. She said manual bag handling was one of the key safety risks to staff.

"The work we are doing now will clear the path for a new super-smart baggage system to be developed at Auckland Airport, which is all about speed and convenience for travellers, while also ensuring their bags continue to arrive at the right place at the right time."

The automated solution uses real-time data to track baggage as it journeys around back-of-house airport infrastructure.

The airport is monitoring travel recovery before committing to its integrated terminal. Photo / Alex Burton

Bags are loaded into intelligent carrier trays tagged with radio frequency identification devices that communicate their location as they travel through an elaborate conveyor network, both speeding up the luggage journey between check-in and aircraft loading as well as reducing the risk of lost bags.

"While the pandemic has hit aviation sector finances hard, it did provide us with a unique opportunity to progress work today that doesn't necessarily have really big dollar values attached, but would potentially be either difficult, risky, or highly disruptive if we waited until we're operating with high passenger volumes.

Demolition of the eastern bag hall will be done alongside other works to clear the eastern airfield for the future construction of a new domestic pier connected to the existing international terminal.

Key transport changes:

• Closure of main international terminal car park (Car park A).
• New Transport Pick-up Zone (taxis, shuttles, rideshare and car rentals) to open later this year.
• From June 8 the main car park outside the international terminal will close to allow enabling works for the new Transport Hub to begin, with the new covered public pick-up/drop-off expected to reopen in late 2023.
• Later this year, demolition at the western end of the international terminal will also mean the relocation of taxis, buses, rideshare and shuttle pick-ups. (Tour buses will remain in the same location).
• All public drop-offs to the international terminal remain unchanged, including taxi, rideshare and shuttle drop-offs.
• Later this year, the pick-up location for some transport operators (taxis, rideshare services including Uber and airport shuttles) will be relocated from the western end of the international terminal to a new transport pick-up zone, located just behind the Novotel or 5-10 minutes' walk away.