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: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news