The minister has pointed out that the commission can also comment on the effectiveness of the type of regulation employed, and ominously for the airport, whether there is a case for moving to a stronger regime.
The commission has previously been accused of being toothless and this gives it the chance to flex its muscles. Whether it has the mandate to implement a tougher system will come back to a Government that is making much of stripping back bureaucracy rather than building it. And what would it mean for other regulated businesses such as lines companies?
The aeronautical fees argument is long-standing. As airlines put it, although airports have to disclose and consult, at the end of it all they set prices at will. They say big price rises come in waves. Auckland Airport says investment in infrastructure is essential to keep the country moving and prices in the past have fallen following commission reviews.
Airlines advocate what they say is a simple solution. They say they’re not looking for heavy-handed regulation of airports but more transparency and ultimately an independent commercial arbitrator to be able to sit down and work out what’s fair and what’s right.
Analysts at Forsyth Barr say such a change would shift the balance of power in the current pricing framework (which favours airports currently) towards airlines.
Auckland Airport would consequently have less control over its airport development.
An industry airline group says the airport is the ultimate monopoly, handling around 77 per cent of air services bound for New Zealand.
But Auckland Airport has come back with a percentage figure of its own, highlighting Air NZ’s stranglehold on domestic flying.
It says the airline has 86 per cent of the domestic market, the most concentrated domestic aviation market in the world and has calculated the airline’s fares here are 32 per cent more on average than before the pandemic.
And Air New Zealand, forecast to be barely profitable in the second half of this financial year, has said it will put up domestic fares. It can, because demand remains robust, certainly among leisure travellers.
Just as consumer law covering travellers in New Zealand is weak, so too is Government data covering the airline and airport sector. In the United States detailed figures on airline service levels are released monthly with poor-performing carriers identified and in Australia fares and performance are actively monitored.
If it’s time for the Commerce Commission to consider tougher rules for airports, how about another agency shining a spotlight on airline behaviour?
