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

 


Regulator affirms view Christchurch Airport prices too high

Regulator affirms view that Christchurch Airport prices too high, lack transparency

By Suze Metherell

Feb. 13 (BusinessDesk) – Christchurch International Airport’s targeted returns over the next two decades are too high and its pricing lacks transparency, the Commerce Commission says, affirming an interim view published in October.

New Zealand’s second-largest airport’s proposed pricing for 2012 to 2032 targets a return of 8.9 percent, above the 7.6 percent-to-8.5 percent range the regulator deems acceptable.

Wellington International Airport and Auckland International Airport are also regulated under the Commerce Act, which requires them to disclose price setting methodology, financial statements and business plans.

The commission is then required to report to ministers on how effective the disclosure regime is in promoting long-term benefit for consumers, limiting excessive profits, incentivising efficiency gains and passing on any gains to the customer.

“Overall, information disclosure regulation appears to have had little influence on Christchurch Airport’s conduct or performance,” Sue Begg, deputy chair at the commission, said in a statement. “Given the charges that Christchurch Airport has set, which were based on a 20-year pricing approach, our conclusion is that information disclosure regulation is not limiting excessive profits.”

Begg said the airport company “has signalled its commitment to improve transparency.”

In 2013 the airport grew revenue by 4.8 percent to $118.5 million and net profit declined by about 6.4 percent to $18.4 million.

Airlines, the biggest customers of the regulated services, say light-handed regulation allows airports to extract excessive profits.

“The latest finding that Christchurch Airport is targeting excessive profits over its 20 year pricing path shows that airports need to be subject to a stronger form of oversight than just information disclosure,” said John Beckett, chief executive of the Board of Airline Representatives New Zealand, a lobby group that represents 21 airlines.

Beckett said the current disclosure regime for the airports is “too light-handed” and he called on the government to negotiate a pricing scheme more in line “with good international practice”.


Under the terms of the regulations, the commission doesn’t make any recommendations to the government as part of its review. Its review of Auckland airport found returns were within its target range while Wellington was deemed to have been targeting excessive profits, a view it has disputed.

Christchurch airport is about three-quarters owned by the Christchurch City Council.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news