Airports say they’re sick of lengthy reviews imposed by bureaucrats, but an airline group says scrutiny is needed to stop monopolies from profiteering.
Documents released today show some airports fuming at the prospect of perceived heavy-handed regulation.
The Ministry of Business, Innovation and Employment (MBIE) in April asked for feedback on whether existing regulations were adequate.
Wellington Airport said the sector was one of New Zealand’s top-performing infrastructure categories.
“Government agencies must stop bowing to airline pressure, and instead recognise the importance of consistent regulatory settings,” Wellington Airport chief executive Matt Clarke wrote.
He said the airport had been “subjected to repetitious reviews of regulatory settings over the last 15 years”.
He told MBIE: “Regulation of New Zealand airports is supposed to be light-handed.”
Clarke said airports faced a 2018 MBIE review, replacement of the Airport Authorities Act with the Civil Aviation Act 2023, and a 2018 Commerce Amendment Bill.
Clarke said the Commerce Commission also imposed a “thorough interrogation” of all airport investment decisions in the past two years.
“If the Government would like to support effective infrastructure investment by airports, it should do so by supporting investor certainty and allowing airports to get on with the job.”
Clarke suggested constant interference in rule-setting would corrode investor confidence.
“If investors cannot be guaranteed a stable return over the 20-to-50 year life of a project, they will simply take their capital elsewhere, likely offshore.”
Auckland, Wellington and Christchurch airports are subject to information disclosure regulation under the Commerce Act.
That means the Commerce Commission reviews airport pricing decisions to better understand their performance.
Umbrella group NZ Airports said the current system was working well with no additional rules needed.
“It is principled, predictable, and trusted by consumers, investors, and regulators alike.”
NZ Airports complained of “discredited arguments” circulating and said a more regulated approach would undermine the Government’s stated commitment to cutting red tape.
But a major airline group said airports would exploit a system soft on regulation.
Cath O’Brien, Board of Airlines of New Zealand (Barnz) executive director, said rules were needed to stop “monopoly” airports becoming exploitative.
O’Brien today told the Herald that Auckland Airport’s decision to spend $6.6 billion on infrastructure upgrades by 2032 was of huge consequence to customers.
“At the moment the airport can set their capital plan to be any amount of money, and the customers must pay, and there’s no contract. And that’s why you have regulation.”
She said if the country wanted a chance at having cheaper domestic flights, the Government should try curtail fee increases from agencies such as Airways NZ, Aviation Security, and the Civil Aviation Authority.
O’Brien said Auckland, Wellington, Christchurch and Queenstown were monopoly airports.
She told MBIE rules were needed to constrain the ability of airports to extract “above normal” returns or take advantage of local or regional monopoly powers.
Barnz said big airports already benefited from lenient rules.
“Once a regulated airport sets prices, airlines are then required to pay those prices as set, usually within a calendar month of prices being struck.”
Barnz said the system was too soft on airports.
“It should be that the regulated airport feels the threat of further regulation, driving them to follow the commission’s findings.”
But the country’s biggest airport took a dim view of what it called an “ad hoc” MBIE review.
Auckland Airport’s chief strategic planning officer, Mary-Liz Tuck, said the company was making major investments and the MBIE process jeopardised that.
In late March, Auckland Airport cut its airline charges after the Commerce Commission found airport forecast revenue was excessive and targeted returns were unreasonably high.
Tuck, however, characterised the commission’s report as “highly favourable” regarding Auckland Airport’s pricing and capital plans.
She said it was strange for MBIE to get involved 11 days after the commission’s report.
“Airlines are acting in their own self-interest, lobbying for more power to hold up airport investment.”
Tuck said Auckland Airport just last year raised $2.5b in capital for new infrastructure.
“Auckland Airport can only raise that capital because investors believe we have stable regulatory settings.”
Tuck said Auckland Airport charges comprised 4-6% of domestic fares.
MBIE said it considered the feedback and provided advice to the Minister of Commerce and Consumer Affairs, Scott Simpson.
No law change was being pursued at this time, but MBIE said the Commerce Commission might review the information disclosure rules next year.
John Weekes is a business journalist mostly covering aviation and courts. He has previously covered consumer affairs, crime, politics and courts.