Excessive profits? Airport pricing regulations get ministerial attention

Press Release – Board of Airline Representatives NZ Inc
Airport pricing is now under ministerial microscopes. John Beckett, executive director of BARNZ (the Board of Airline Representatives NZ), says that is exactly where airport landing charges and terminal charges should be examined.

“Airports in New Zealand are currently free to charge airlines as they see fit, despite the fact that they have monopoly positions,” Mr Beckett says. “That is not the case in most developed countries.”

“A recently concluded review by the Commerce Commission covering Auckland, Wellington and Christchurch Airports showed the real need for regulatory teeth for airport pricing. The Commission concluded that both Wellington and Christchurch Airports were targeting excessive profits.

“An examination of the effectiveness of information disclosure regulation for major international airports has been initiated in consultation papers by the Ministry of Transport and Ministry of Business Innovation and Employment released today.

“BARNZ welcomes the review and is confident that it will conclude that regulatory change is required to protect consumers from excessive prices in the future. A negotiate/arbitrate process that would be ideal for airports is already contained in the Commerce Act framework.

Mr Beckett says travellers are affected by what airlines get charged by airports because the costs get reflected in ticket prices. “The current New Zealand regime is extraordinarily light handed,” Mr Beckett says. “It is time we adopted international best practice.”

News from MBIE
The Ministry of Business, Innovation and Employment today released a consultation paper inviting feedback on the regime that requires major airports to make their performance and financial information publicly available.

Iain Cossar, General Manager Commercial & Consumer Environment, says the information disclosure regime set out in the Commerce Act allows regulators to monitor Auckland, Wellington and Christchurch airports’ potential use of market power.

“The Act requires that these three airports disclose information such as their financial statements, prices, pricing methodology, customer service and quality indicators,” he says.

The release of the consultation paper, Effectiveness of Information Disclosure Regulation for Major International Airports, follows reports on the three airports, completed last year by the Commerce Commission, which found mixed evidence on the effectiveness of the current information disclosure regime.

“In light of the Commerce Commission reports, it is timely to step back and review how well the regulatory regime for major international airports is doing in promoting outcomes consistent with those in competitive markets,” says Mr Cossar.

This document is being released at the same time as a Ministry of Transport consultation document, the Civil Aviation Act 1990 and the Airport Authorities Act 1966 Consultation Document.

“These documents are being released together so interested parties can get a picture of the whole regime and comment on the interaction between the Commerce Act with the price setting provisions in the Airport Authorities Act,” he says.

“Feedback will help determine whether the regulatory regime for major international airports is effective or whether further policy work is required,” says Mr Cossar.

The four month consultation ends on 28 November. For more information and to make a submission see: www.med.govt.nz/business/competition-policy/part-4-commerce-act/airport-regulation/effectiveness-information-disclosure-regulation.

 

1 comment:

  1. Hel, 1. August 2014, 19:37

    At the same time they might want to have a look at airline pricing. How is it 20% cheaper to get to the USA via Australia than with Air NZ direct?

     

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