KEY POINTS:
The Government's proposal to impose strict disclosure rules on airports is partly to build confidence in pricing regimes for potential foreign buyers of Auckland International Airport.
In Cabinet papers on the review of the Commerce Act, ministers said it was important to make "timely decisions" given the interest
of overseas investors in Auckland Airport.
"It is important that investors have certainty about the regulatory regime, that the regime is more mainstream internationally and that it protects New Zealand's long term best interests," Transport Minister Annette King and Commerce Minister Lianne Dalziel said.
The Canada Pension Plan Investment Board has launched an offer for 40 per cent of Auckland Airport and the company is now seeking other investors.
The review, which is due to become law next year, recommends Auckland, Wellington and Christchurch Airports be regulated under the Commerce Act rather than the Airport Authorities Act.
Airlines and airports have battled for years over what landing and other aviation fees airlines should pay. Airports have been required to negotiate with airlines but can impose fees which aren't agreed to.
In the Cabinet paper, the ministers said they considered the present regulatory regime to be unsatisfactory.
"In our view it does not lend itself to outcomes that would be sustainable in a competitive market. The incentives on the airports to negotiate are weak because only consultations are required and the airports may set charges unilaterally."
Dalziel yesterday said the new rules would not control the level of airport charges but would subject airports to an "enhanced disclosure regime".
This would include how their charges were set, based on methodologies which will be developed by the Commerce Commission.
Air New Zealand said the proposal vindicated its stand, which has extended to seeking a judicial review of Auckland Airport's regime and holding back on paying the $70,000 in extra fees a month it has been levied since September.
"When we look at pricing principles you just can't justify the current price," the airline's chief financial officer Rob McDonald said, adding that he hoped the legal action could be stopped.
"We're asking for a set of rules and guidelines - they'll take the steam out of the problem we have now which is utterly one-sided to bring balance to it and that's only good for consumers," McDonald said.
The airline would pass on changes in charges to consumers, with lower fees resulting in lower airfares.
Up until now negotiations with the airports had been disastrous for airlines.
Auckland International Airport said it would consider the proposed changes.
Airport companies have defended increases in airline landing fees as necessary to fund infrastructure projects.
Auckland Airport, which is raising landing fees 2.5 per cent a year for the next five years, is nearing the end of a four-year, $500 million upgrade and expansion. Wellington International Airport is raising fees 2.85 per cent a year for the next five years amid a $100 million capital investment programme.
Board of Airline Representatives figures show charges in New Zealand exceed those in Australia. Landing a Boeing 747 at Auckland costs $12,000 while in Sydney it costs $11,200.
Board chairman Stewart Milne said airlines do not want price regulation and were comfortable with the direction the Government was taking.
Airport crackdown
* The review of the Commerce Act says Auckland, Wellington and Christchurch airports' price setting should come under the act instead of the Airport Authorities Act.
* The airports should be subject to the information disclosure regime under the amended Commerce Act.
* The Commerce Commission will undertake periodic reviews of the disclosed information against its pricing principles.
