Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Wellington Airport extracting 'excessive profits': regulator

Wellington Airport extracting 'excessive profits', regulator says

By Paul McBeth

Feb. 8 (BusinessDesk) - Wellington International Airport, which is co-owned by Infratil and Wellington City Council, is extracting excessive profits by targeting higher returns than it should, according to the Commerce Commission.

The transport hub is likely to recover between $38 million and $69 million more than it needs to for a reasonable return between 2012 and 2017, the antitrust regulator said in a final report to Commerce Minister Craig Foss and Transport Minister Gerry Brownlee. The commission thinks a reasonable return is 7.1 percent to 8 percent, whereas the airport is projected to make returns of between 12.3 percent and 15.2 percent, it said.

"The excessive profits are largely attributable to Wellington airport valuing its land higher than we think it should, and Wellington airport targeting a higher return than appropriate for its circumstances," deputy chair Sue Begg said in a statement. "We consider that the regime (of stricter information disclosure) has not been effective in limiting Wellington airport's ability to extract excessive profits."

The regulator is required to report to the ministers as soon as possible after an airport, as a regulated monopoly, sets new prices. The final report was delayed from a late December date after the draft determination was published in November.

The airport is challenging the regulator's input methodologies, which may prompt a rethink, the commission said.

The review doesn't make any recommendations on what regulation should apply to Wellington airport, as that's outside the scope required by law.

Wellington Airport has previously been accused of price gouging in the setting of its air service charges, with national carrier Air New Zealand flagging a $200 million lift in landing fees over the coming five years.

The review found Wellington Airport has improved its service quality and how it structures its prices, and said there was an appropriate level of innovation at the gateway.

The information disclosure regime couldn't measure the efficiency of its operational expenditure, and needed a longer timeframe in looking at the effectiveness of the airport's investment.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news