Airline Criticism Of Auckland Airport Not Supported In ComCom Draft Report

NZ Airports welcomes the Commerce Commission’s draft conclusions that Auckland Airport’s capital expenditure, including its new domestic jet terminal, is significant but reasonable, and that it has followed appropriate processes in consulting and costing its capital plan.

The Commission has released its draft report into Auckland Airport’s price setting event 4 this morning.

“For months airlines have argued against Auckland Airport’s infrastructure build and called for government intervention, despite participating in twelve years of intensive consultation,” NZ Airports Chief Executive Billie Moore says.

“Today’s draft report does not support claims from airlines that Auckland Airport has not properly consulted on its new terminal build and that it is spending too much. The Commission’s draft concludes the opposite - that the airport has applied rigour to its investment plans and that the spend is reasonable.

“This is a significant capital programme, but it is essential for New Zealand’s international and domestic connectivity. Airlines’ attempts to defer the build risk a greater infrastructure deficit in the future – exactly the problem we see in other infrastructure classes around the country.

“The Commission notes that the airport is targeting a weighted average cost of capital (WACC) that it views as too high. Auckland Airport has confirmed that if the Commission’s final conclusions support a lower WACC, then it will adjust its pricing - just as it did in a previous price setting round.

“We welcome that commitment. Airports take the Commission’s judgements extremely seriously – and this is an example of the regulatory regime working well and as intended.

“We note the Commission has relied on the 2023 Input Methodologies – which were concluded after Auckland Airport’s price setting – for its judgements on the airport’s target WACC. While using the 2023 Input Methodologies is a consequence of the Commission's acknowledgement that Auckland Airport was justified in departing from the outdated 2016 Input Methodologies, it is nevertheless a problematic approach.

“In addition to the relevant Input Methodologies being subject to merits review, NZ Airports has previously written to the Commission highlighting a number of technical errors in those methodologies, which we think have impacted its findings in this draft report.

“We look forward to participating in the stakeholder consultation on the draft report and thank the Commission for its work.”

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