Airports to escape price curbs

By CHRIS DANIELS

Auckland and Wellington Airports have escaped Government price controls, with Commerce Minister Lianne Dalziel saying they would cause more harm to the economy than good.

Airlines have long claimed that the two airports have abused their monopoly positions, revaluing assets in order to justify higher charges.

Dalziel said she hoped her decision marked an end to the long-running inquiry into airport pricing, which began in 1998 and has cost $2 million.

The Commerce Commission released its final report last year, recommending that price controls be imposed on Auckland International Airport, but not on Wellington and Christchurch.

Wellington should be regulated only if it increased its prices significantly.

Dalziel said she had not "gone against" the commission, but had simply made her decision based on a wider range of considerations.

Imposing controls would be detrimental to the economy as a whole, she said, despite bringing a small benefit to the airlines.

Stewart Milne, executive director of the Board of Airline Representatives, said if controls were not imposed when monopoly pricing was found, the credibility of the system was brought into question.

He said monopoly providers got a clear signal that they could monopolise prices secure in the knowledge they would not be penalised.

Wellington International Airport announced in February a 27.6 per cent increase in landing charges and a 311 per cent increase in terminal charges, coming to a total fee increase of nearly 78 per cent.

Dalziel said it was not her job as Commerce Minister to look solely at the impact on the airlines or the airport companies.

"It is my responsibility as Minister of Commerce to look at the overall impact of my decision on the economy as a whole. That is where the net public benefit test comes in."

She could only look at the landings charges component of the recent rise in Wellington Airport's charges.

Annual benefits to the airlines of price controls were small, worth less than $400,000 at Wellington and $1.7 million at Auckland.

Wellington Airport's chief executive, John Sheridan, said the decision was a good one and it allowed the company to proceed with certainty.

"We see this decision being significant to the whole New Zealand economy, as it sends a clear signal that the Government is committed to creating a climate that attracts investment."

Air New Zealand's chief operating officer, Andrew Miller, said the airline was disappointed and frustrated at the minister's decision.

He said the airports had been sent the clear message that they could charge whatever prices they liked.

The total cost of the new charges to Air New Zealand, which carried 78 per cent of all domestic traffic in and out of Wellington Airport, was $12 million a year.

The airline is now collecting this money from passengers, but refusing to pass it on to the airport until its dispute with it is resolved.

Wellington Airport and Air New Zealand are engaged in separate legal action over the airport's fees.