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

 


UDPATE: Wellington Airport says regulator's report flawed

UDPATE: Wellington Airport says regulator's report flawed

By Paul McBeth

Feb. 8 (BusinessDesk) - Wellington International Airport, which is co-owned by Infratil and Wellington City Council, denies it's extracting excessive profits and says the Commerce Commission has used a flawed model in assessing the transport hub's returns.

The airport's effective rate of return is 8.1 percent, within the regulator's tolerance and has cheaper passenger landing charges than Auckland and Christchurch at $11.39 a head, it said in a statement.

The regulator's claim that the airport is likely to recover between $38 million and $69 million more than it needs to for a reasonable return between 2012 and 2017, was wrong because it overestimated future returns and excluded commercial concessions to airlines, it said.

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 in a final report to Commerce Minister Craig Foss and Transport Minister Gerry Brownlee on the airport's information disclosure.

Wellington Airport needs a stable regulatory environment to support investment of some $100 million over the next few years to maintain its current standards and meet growth targets.

"We are confident the ministers will recognise the investment that is required to accommodate growth for Wellington Airport and that on Australasian and world benchmarks its airport charges are in the low range," chief executive Steve Sanderson said.

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.

Commission deputy chair Sue Begg said Wellington Airport's excessive profits were "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," and that "the regime has not been effective in limiting Wellington airport's ability to extract excessive profits."

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.

Shares of Infratil fell 0.8 percent to $2.41.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news