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Investment company Jarden says market concerns over Auckland Airport getting over-regulated have been overblown.
Airports are under scrutiny from the Ministry of Business, Innovation and Employment (MBIE) competition policy team.
Aeronautical activities at Auckland Airport are regulated, but the $13.3 billion company’s retail and car parking activities are not.
Somerefer to that as a dual till model.
Jarden analysts Grant Lowe and Zachary McIntyre said concerns about the dual till being crushed and the airport becoming over-regulated had been overstated.
They said MBIE was not projecting any government desire to overhaul airport regulation but was responding to airline industry submissions about mergers and anti-competitive conduct.
The Jarden analysts said that relevant Cabinet papers indicated the fuel, residential building products supplies, grocery and personal banking sectors were more likely to be targeted.
“Heavily concentrated sectors referenced are those where the Commerce Commission has recently completed market reviews but lacked certain powers, which the current review is seeking to address.”
The Board of Airline Representatives of New Zealand (Barnz) has said there was not enough oversight of how airport spending on investments impacted travellers.
“As New Zealand’s greatest monopoly airport, Auckland Airport has taken decisions to spend some $5.9 billion dollars of aeronautical capital between 2023 and 2032 – and took decisions on this before ‘consultation’ with its airline customers was concluded," Barnz said last week.
Lowe and McIntryre said Auckland Airport’s drive-up car parking tariff rates compared favourably with those in central Auckland and were broadly in line with Wellington and Christchurch’s airports.
Daily charges ranged from $46 to $62 at Auckland Airport, compared to $40 to $70 in Auckland’s CBD, the analysts said.
The parking rates at Auckland Airport compare favourably to the Wilson Parking facility at its 51 Shortland St site, Jarden said.
The Jarden analysts said the combined retail and car parking segment contributed about 30% of Auckland Airport’s 2024 revenues.
“Previous commentary from Auckland Airport suggests that while the unregulated operations may earn a higher return than the regulated base, this is consistent with its view that the higher risk warrants a higher return.”
The analysts said any future regulatory review would likely find limited evidence Auckland Airport had wielded excessive market power.
John Weekes is a business journalist covering aviation. His previous jobs included Herald on Sunday consumer affairs reporter, Dominion Post crime reporter, NewsRegional Brisbane court reporter and Herald online business editor.
