“When airports make excessive profits, it’s ultimately airline passengers who are paying.”
The airport has pledged to review its prices if the final report, due before March next year, finds its returns are excessive.
Domestic carriers have expressed concern for some time about the scale and cost of the Auckland Airport redevelopment.
“While the Commerce Commission’s draft suggests that the investment in Auckland Airport’s development may be appropriate, this is not a view shared by many of the AIAL (Auckland International Airport Ltd) aeronautical partners and that will be a strong feature of the response to this draft report,” the airlines say.
The airlines believe the regulatory regime is not in the best interests of New Zealand consumers. AIAL is required to only consult with airlines, but it doesn’t need to reach any agreement.
Domestic airlines are calling on the Government to urgently commission an independent inquiry into airport regulation.
This can be conducted under a section of the Commerce Act, at the direction of Commerce Minister Andrew Bayly. He expressed concern about Auckland Airport’s price plan this year and has been approached for comment on the airlines’ fresh call for an inquiry.
The airline statement says the commission has several options to keep regulated airports under control.
These include steps that require airports to negotiate with their airline customers on a commercial basis, go to arbitration if that fails, or the regulator can set the price and quality of their service.
These options do not require new laws to be passed, so it’s not a case of more red tape or government intervention — airlines are simply asking the commission to use its existing inquiry power to determine which regulatory option will deliver more control over airports and, therefore, better value for consumers.
Air New Zealand chief executive Greg Foran said New Zealanders were in the midst of a cost-of-living crisis and businesses were cutting costs.
“The last thing they need is for more costs to be piled on to travel because Auckland Airport isn’t acting in the best interests of New Zealanders,” he said.
“We agree some development is needed, but we’re ready to get back to the table with Auckland Airport to ensure that the airport has an affordable and enduring plan that helps connect New Zealanders with each other and the world. The right regulatory framework will allow us to do that.”
Air Chathams chief operating officer Duane Emeny said an inquiry into airport regulation was a crucial opportunity to establish a regulatory environment that more effectively protected consumers and ensured airport investments were made responsibly and affordably.
Barrier Air chief executive Grant Bacon said the proposed redevelopment at the airport still had turboprops in another terminal, meaning smaller carriers and regional passengers needed to walk to another terminal and got very little from the large-scale development, but would still be paying for it.
“There is also no new runway factored into the large spend.”
Jetstar Group chief executive Stephanie Tully said as a low-cost carrier, Auckland Airport’s proposed redevelopment would result in steep increases to passenger charges, impacting demand for air travel and the airline’s ability to offer low fares.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
