Commerce minister Kris Faafoi still waiting for response from Auckland Airport on price-setting ruling

The airport says it is still reviewing a Commerce Commission ruling. Photo / Dean Purcell

Three months after Auckland Airport was told its returns were not fully justified, Commerce Minister Kris Faafoi is still waiting for a response from the company but says he would expect a reduction in charges.

The airport is still working through an ''internal review'' of the Commerce Commission price ruling which was released in late October.

Faafoi said he was looking forward to a response from the company.

''I would expect to see a reduction in charges reflecting the finding of the Commerce Commission and to show the airport is mindful of the need to balance shareholder returns while providing an appropriate service at a fair cost to customers,'' the minister told the Herald.

While the airport would need a ''reasonable time'' to respond, Faafoi said he would look to meet with the company to discuss the commission's finding.

The commission estimates that Auckland Airport would earn an additional post-tax return of $37 million on the majority of its regulated services compared to the commission's benchmark return.

While Faafoi has acknowledged that did not necessarily represent excess profits, he said before Christmas that the airport was targeting a return on investment that didn't look to be in the long-term interests of consumers.

While the light-handed information disclosure regime had been largely effective, he has warned the Commerce Amendment Act introduces a shorter inquiry process for the commission to assess whether further regulation is needed at airports.

In its final report released in October, the commission found returns targeted by Christchurch Airport were now generally acceptable.

Airlines and their representative groups say that it is time for the airport to listen to the commission on pricing but fear the regulatory regime allows the company to charge as it sees fit.

Auckland Airport has acknowledged that while the commission can't set prices its views do place considerable pressure on our price setting and form a kind of "shadow price control" for our regulated business.

In response to the commission report on October 31, the airport said it would carefully review how evidence was assessed and findings shaped.

Chief financial officer Phil Neutze said then that the company took an Auckland Airport-specific approach to setting our prices given the unprecedented size of its investment plan during the next five years.

"Auckland Airport is investing circa $2 billion in long-term infrastructure over this five-year pricing period which is the largest airport development ever undertaken in New Zealand. We are talking about an average price increase over five years of 66 cents per passenger journey," he said.