Rebecca Quilliam

Rebecca Quilliam is senior reporter at the NZME. News Service office in Wellington.

Kiwi travellers ripped off by airports - watchdog

Three of the country's major airports are being accused of causing higher air fares because of inflated landing fees charged to airlines.File photo / Dean Purcell
Three of the country's major airports are being accused of causing higher air fares because of inflated landing fees charged to airlines.File photo / Dean Purcell

New Zealand travellers are being ripped off by three of the country's major airports by paying higher air fares because of inflated landing fees charged to airlines, a consumer watchdog says.

The Commerce Commission has released a report into Wellington International Airport that found the pricing regime meant there was nothing stopping it from making "excessive profits''.

The report said between 2012 and 2017 the airport was likely to make a profit of between $38 million and $69m more than needed for a "reasonable return''.

A reasonable return would be 7.1 per cent to eight per cent, rather than the 12.3 per cent to 15.2 per cent return the airport was expected to receive.

A similar report into fees at Auckland and Christchurch was due out later in the year.

Wellington Airport said its charges fell between what Auckland and Christchurch charge.

Consumer NZ chief executive Sue Chetwin said travellers were paying higher prices as a result of the expensive landing fees.

"That's one of the reasons why the Commerce Commission monitors airports; because they are running as monopolies with these landing charges.''

The national carrier, Air New Zealand, had to put its fare prices up by three per cent last April as a direct result of the increase in fees charged by Wellington Airport, Ms Chetwin said.

"It's clear from this report, and I can't imagine that Auckland and Christchurch are going to be much different, that New Zealanders are paying for these excessive fees.''

Ms Chetwin said if the airports weren't willing to drop their fees, the Government would have to step in.

Commerce Minister Craig Foss had received the report, but would not comment on it until he had spoken with advisers, a spokeswoman for the minister said.

Labour Party Commerce spokesman Clayton Cosgrove said the Government looked at changing the law so airport price-setting was more accountable and equitable.

"The current hands-off regime clearly has not worked.

"It would make sense to amend the Commerce Act to subject airport pricing to a negotiate-arbitrate mechanism that would take away airports' power to impose prices at will, and require them to negotiate with customers like Air New Zealand with either party having the option to call in an independent arbitrator.''

Both Air New Zealand and Jetstar said customers were shouldering higher air fares because of the excessive airport charges.

Board of Airline Representatives New Zealand chief executive John Beckett said despite the report, it was unlikely landing fees would drop.

``The Commission's empowered to say what it thinks ... but it doesn't have the power to do anything about it.''

It was up to the Government to decide what to do about the report, he said.

Wellington airport is fighting back against the Commission and challenging its input methodologies in the High Court.

The company has also questioned the Commission's forecast of the airport's future returns.

Chief executive Steve Sanderson said the airport's predicted rate of return was 8.1 per cent, which was in the range the Commission considered as reasonable.

Wellington's charges were between those at Auckland and Christchurch airports, and in the lower range of Australasian airports in terms of cost per passenger, he said.

The New Zealand Airports Association backed Wellington airport by saying charges here compare very favourably on an international basis.

Its chief executive Kevin Ward said charges for domestic flights were generally between a third and half of the Australian equivalents, and Auckland, Wellington and Christchurch airports' charges for international flights were in the mid to lower range of worldwide comparisons.

- APNZ

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production apcf03 at 28 Nov 2014 17:26:23 Processing Time: 440ms