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

 


Airports Association wants regulator to probe Air NZ charges

Airports Association wants Commerce Commission to inspect Air NZ's regional fares

By Suze Metherell

Aug. 28 (BusinessDesk) - The New Zealand Airports Association has called on the Commerce Commission to regulate Air New Zealand's regional fares, where the national carrier has an effective monopoly.

The Auckland-based airline yesterday announced a 45 percent uplift in annual profit to $262 million, its third consecutive year of earnings growth. Domestic routes between the major centres, such as Auckland, Wellington and Christchurch, are often discounted, but the NZ Airports Association says regions are right to question whether provincial routes are generating excessive profits.

"There are big question marks around Air New Zealand's monopoly domestic routes where there is potential for excessive profits, and no transparency or monitoring," said Airports Association chief executive Kevin Ward. "The Commerce Commission could be directed by the government to include monopoly regional airlines in an information disclosure regime. That would be the best way to assure New Zealanders that Air New Zealand's prices are fair."

Airports charge airlines a landing fee, and have an interest in keeping airfares low to boost traveller numbers through their gates. Last year outgoing Air NZ head Rob Fyfe accused Wellington International Airport of price gouging and flagged a $200 million lift in landing fees over the coming five years, which he said in turn forces the airline to lift airfares. Airports fall under Commerce Commission regulation, as they're considered to have an effective monopoly and are required to disclose financial statements and business plans, as well as keeping returns under 8 percent to limit excessive profits.

In the 2014 financial year, Air NZ increased passenger numbers 2.3 percent to 13.72 million, with a 1.2 percent lift in revenue passenger kilometres to 14.85 million, while short-haul yields improved 0.3 percent to 17.1 cents per RPK. JetStar Airways, Qantas's discount airline, had made inroads into New Zealand's domestic market since launching in 2009, reporting a 22.4 percent market share at June 30 last year, but has since quit its Wellington-Queenstown route, as its Australian parent comes under increasing pressure.

“The virtual monopoly they have in a lot of domestic routes does certainly benefit Air New Zealand," said Grant Williamson, director at Hamilton Hindin Greene. “You do question whether there’s going to be any backlash at some stage in the future on some of those routes as you do see a few media reports.”

Shares of Air NZ extended yesterday gain, rising 2.1 percent to a two-month high of $2.22. The shares have climbed 3 percent this year, outpacing an 11 percent gain in the NZX 50 Index over the same period. The stock is rated an average 'buy' based on six analyst recommendations compiled by Reuters, with a median target price of $2.30.

Last year the government reduced its stake in the airline to 52 percent, from a previous three quarter stake.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news