Final report on Christchurch Airport’s pricing information

Issued 9 July 2015

Commission releases final report on Christchurch Airport’s pricing information

The Commerce Commission has published its final report on Christchurch International Airport Limited’s (CIAL) disclosure of revised pricing information.

Commission Deputy Chair Sue Begg welcomed the effort CIAL has made in improving the transparency of its pricing.

“We’re pleased with the steps Christchurch Airport has taken to improve its disclosure and make it easier for stakeholders to assess its performance. As noted in our report, we believe Christchurch Airport can further improve transparency to allow interested parties to fully understand its profitability in the context of its 20-year pricing approach. It has committed to addressing our remaining concerns at the next pricing reset in 2017 and we are satisfied this is a sensible approach to take.”

The Commission received three submissions on its draft report released in May. These submissions have been addressed in the final report released today.

For further information, including a copy of the Commission’s report, see:http://www.comcom.govt.nz/airports-information-disclosure-summary-and-analysis/

Background
Wellington, Auckland and Christchurch airports are subject to information disclosure regulation under Part 4 of the Commerce Act. The Commission reviews the airports’ pricing decisions in its summary and analysis capacity. The Commission does not regulate the prices the three airports charge. Airports may set prices as they see fit, but they must consult with customers on any major capital expenditure that will impact future prices.

Prices are set for determined periods known as price-setting events. CIAL’s first price-setting event began on 1 July 2008 and its second on 1 December 2012, with the third scheduled for 1 July 2017.

In February 2014 the Commission released a report on the effectiveness of the information disclosure regulation in relation to CIAL as required by section 56G of the Commerce Act.

The report noted information disclosure regulation appeared to have had little influence on CIAL’s conduct or performance. Its proposed prices over the 20 years from 2012 to 2032 targeted a return of 8.9%, which is higher than the Commission’s view of an acceptable return as being between 7.4% to 8.4%.

CIAL has not changed its pricing for the second price-setting period (unlike Wellington Airport, which changed its pricing before publishing its re-disclosure). This is because the Commission previously assessed CIAL's pricing for this period as being within an acceptable range.

A copy of CIAL’s section 56G report from February 2014 can be found here.

The Commission’s ongoing regulatory role is to provide summary and analysis of the performance of the three airports. Any future decisions on airport regulation lie with Ministers.

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