RAL puts in fresh bid to buy skifield

Ruapehu Alpine Lifts, operator of the Whakapapa skifield on Mt Ruapehu, has filed a second application with competition watchdog the Commerce Commission to buy Turoa Ski Resort.

The commission rejected Ruapehu's bid to buy Turoa last year, saying the sale would give it a monopoly on the North Island ski market.

The commission dismissed Ruapehu's argument that the skiing market should be treated as a national one, and argued that the North Island was a distinct market.

The two Mt Ruapehu fields comprised 98 per cent of that market - complete market dominance.

ANZ Bank put Turoa into receivership in March after three bad seasons. Poor snow in 1998 on top of volcanic eruptions in 1995 and 1996 caused debt to pile up.

Ruapehu said in June that it had bought the troubled skifield operator from receiver PricewaterhouseCoopers, subject to commission approval.

In its latest bid for that approval, Ruapehu said it had been interested in merging the Whakapapa and Turoa fields for some time.

"The relatively poor skiing years of 1995 to 1998 highlighted to Ruapehu that the long-term viability of both fields depended on greater commercial strength and marketing power than either company could provide separately," the application said.

Ruapehu accepted the commission's previous finding that the North Island was a single ski market. But the distance between the skifield and a skier's home became less important the longer the skier's planned stay.

The longer the stay the further a skier would travel, Ruapehu said.

This was primarily due to travelling time and cost.

"As a result ... there are a range of different choices applicable to different skiers. A single geographical market would not acknowledge this," the application said.

If travelling time or cost reduced, a skier would travel further.

"The falling real cost of airfares and the increase in the number of direct flights to South Island skifields are factors that have reduced travelling cost and time respectively and have made travel to South Island skifields an option for North Islanders for relatively shorter stays than ever before."

That meant a Ruapehu takeover of Turoa would lead to dominance only of the North Island short-stay market, it said.

"Other activities and markets served by Ruapehu will remain competitive. Therefore, at most, detriments could only occur in relation to the part of the business attributable to skiing services for short-stay skiers."

The applications said a Ruapehu takeover would bring several benefits. Rather than reduced competition pushing up prices, a takeover would mean savings for the public as a result of the combined entity being able to produce the same output for less input.

It would also benefit the region as more skiers meant higher revenue; single ownership would be able to focus more on destinational/regional marketing; and Ruapehu would bring stability to the region which, coupled with a rise in skier numbers, should lead to more investment.

Ruapehu estimated the public benefit from a takeover would be $3 million in the first year and the benefits would increase.

The commission has 60 working days to decide and is expected to release its findings in October.

- NZPA

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