BARNZ Supports Call For Inquiry Into Auckland Airport

Board of Airline Representatives (BARNZ) supports Air New Zealand’s call for a Commerce Commission Inquiry into the regulation of Auckland Airport (AIAL).

“Large airports in New Zealand like AIAL are monopoly businesses so strong economic regulations must be in place to make sure they are not targeting excess profits and passing unjustified costs to consumers,” says Cath O’Brien, Executive Director of BARNZ.

“Auckland Airport is a monopoly of monopolies – receiving some 77% of air services bound for New Zealand. It is the ‘Transpower’ of airports, effectively controlling the load for air traffic for the rest of the country.”

“AIAL’s sharp swing from underinvestment to a bow wave of excessive capital cost forced onto unwilling customers is a sign of regulatory failure. The scale of this proposed investment is larger than any other airport development BARNZ has been able to find in the Asia-Pacific region.

“Airlines have consistently said this is far too expensive but of course, AIAL is not incentivised to reduce its capex costs – the higher these costs are, the greater the regulatory return.

“Capital plans and prices set today will see costs for use of the airport rise at all points. Costs for regional airlines, cargo operators, domestic services and Tasman services will be hard hit. Customers will notice price rises today and in the years ahead.”

O’Brien says that it is time to look carefully at whether regulation of AIAL is working.

“We urge the Commerce Commission to consider an Inquiry as the best next step in making sure this monopoly airport develops its airport sustainably.

“We can all see investment is needed. BARNZ considers airports should invest in their assets in a sustainable manner over time. However, that investment should not come at a cost that will push the price of travel permanently higher for New Zealanders.”

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