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No Investigation Into Auckland Airport’s Sharehold

No Commerce Commission Investigation Into Auckland Airport’s Shareholding In Queenstown Airport

Auckland Airport to strongly defend High Court proceedings brought by vested interests

The Commerce Commission has informed Auckland Airport that it is not conducting an investigation into Auckland Airport’s acquisition of a minority stake in Queenstown Airport.

The Commerce Commission considers the acquisition is unlikely to give rise to a substantial lessening of competition in a market. The Commerce Commission reached this view, prior to a complaint received recently from Air New Zealand, on the basis of the market definitions used in its 2002 airports inquiry.

Auckland Airport welcomes the Commerce Commission’s decision as a commonsense outcome which was entirely expected.

Following the Commerce Commission’s decision, Auckland Airport advises that it has been served notice today of High Court proceedings in relation to Queenstown Airport’s recent decision to issue shares to, and form a strategic alliance with, Auckland Airport.

The plaintiffs (albeit in separate proceedings) are Air New Zealand and Queenstown Community Strategic Assets Group Trustee Limited (SAG), a recently incorporated company with Queenstown businessman John Martin as its sole director and shareholder. In each of the proceedings, Queenstown Lakes District Council, Queenstown Airport Corporation Limited and Auckland Airport are named as first, second and third defendants respectively.

The plaintiffs are seeking a judicial review of the share issue, claiming it breached certain provisions of the Local Government Act 2002. They are also seeking an injunction preventing the issue of any further shares to Auckland Airport or the entering into a shareholders’ agreement between Auckland Airport and Queenstown Lake District Council, as is proposed as part of the transaction announced 8 July 2010.

Auckland Airport believes the plaintiffs’ claims are without merit and will strongly defend the proceedings.

It is unfortunate that these legal proceedings have been brought by parties who wish to attempt to frustrate an alliance intended to deliver great benefit to the development of the tourism industry in the Queenstown Lakes District. We believe these parties have vested interests and do not necessarily have the wellbeing of the wider Queenstown community at heart.

SAG is acting as trustee for a self-appointed group of high net worth local businesspeople. This group has chosen to ignore the significant commercial benefits that will flow to the broader Queenstown community from this transaction through increased tourism activity and improved facilities at Queenstown Airport.

Air New Zealand has publicly expressed interest in buying shares itself in Queenstown Airport. However we understand Queenstown Airport has made it clear it would make no commercial sense for it to have an individual airline, or even a consortium of airlines, as a shareholder when other competing airlines are also important to the airport’s strong growth path.

Air New Zealand has also suggested that Auckland Airport’s pricing practices will push up Queenstown Airport’s airport charges. Such claims are simply not supported by the facts. Auckland Airport’s charges are among the lowest of all New Zealand and Australian airports. In addition, Queenstown Airport’s charges are set by its board and management, not by any minority shareholder.

We do not intend to allow these legal proceedings to distract from our focus on making the alliance work in the best interests of both airport companies and their shareholders, and the wider Queenstown Lakes District community.

ENDS

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