KEY POINTS:
Yay for the foreigners who want to take over Auckland International Airport. They've actually managed to scare the Government into (belatedly) doing something to protect the interests of Kiwi travellers.
For some years I've raved on about the way the airport exploits its monopoly position without having the slightest impact (apart from supportive messages from the airlines and a couple of phone calls from the airport seeking to put me straight).
If you want to travel overseas - or, if you live in Auckland, nip down to Wellington or the South Island - you've got very little option but to use Auckland International Airport regardless of what it decides to charge.
The airline knows that and over the years has taken full advantage ... and we travellers have paid the price for its fat profits.
My particular beefs are:
* The company has done next to nothing to improve access to the airport, so for most people the only way to get there is still by car, and has consistently increased the car parking charges and the fees paid by taxis at way above the level of inflation.
* I've always found it bizarre that the airport can get away with charging international passengers a departure fee of $25 - to be arbitrarily increased by $1 a round trip for each of the next three years - for the privilege of spending money at its pricey cafes and shops. (To add insult to injury the international security charge that used to be included in that departure fee but is now paid by the airlines - and, inevitably, added on to ticket prices - is about to be increased by the Government by 16 per cent to $15.)
* While airlines such as Air New Zealand strain to cut costs so they can stay competitive their efforts are constantly undermined by soaring airport charges. Last year the airport increased the terminal services charge to airlines by 23 per cent and they rose a further 2.5 per cent this year.
* I've no objection to a company making a reasonable return on its capital but the operative word there is reasonable. London-based research company Transport Research Laboratory, which keeps track of airports' returns, found Auckland International Airport was the most profitable in the world in 2005 and last year it was second.
Until now none of this seems to have bothered the Government.
When the Commerce Commission investigated five years ago it concluded Auckland Airport was overcharging airlines by $4.5 million a year and asked the Minister of Commerce to impose price controls. The minister decided that would do more harm than good. When PricewaterhouseCoopers did an analysis for Air NZ it concluded that in the 2006 financial year the airport made excess returns of $90 million. Nothing happened.
But, since the Dubai Arabs and Canadian pensioners started to look at buying this highly profitable company, everything has changed. A paper just issued on behalf of the Ministers of Transport and Commerce has suddenly decided that, "The need for a robust regime is pressing given the current overseas interest in acquiring greater shareholding in Auckland airport."
This pressing need has caused the ministers to notice that: "Many airports, particularly the larger and international airports, have strong natural monopoly characteristics. This potentially enables them to set prices above those that will prevail in a workably competitive market and/or to provide inferior service."
Could that be happening here? Ministerial advisers checked out the Commerce Commission's finding back in 2002 and decided that, if anything, it might have understated the excess returns. They also suggested that not much would have changed since then.
But what about the existing rules? The paper concluded that "the current regulatory system for the three major international airports is inadequate." The requirement for airports to disclose financial information about their prices rises is "ineffective"; the statutory requirement "to consult not to negotiate ... means airports ... tend to make decisions in their own interests"; and the underlying threat, that if airports overcharge they might be regulated, is described as "weak".
In the light of all this the Government has decided that:
* Auckland, Wellington and Christchurch airports should come under the stricter price-setting rules of the Commerce Act instead of the Airport Authorities Act.
* The airports should also be subject to the more demanding information disclosure regime under the amended Commerce Act.
* The Commerce Commission should develop pricing guidelines and periodically review airport prices against those guidelines to see if further regulation is needed.
* The Ministry of Economic Development should carry out further investigations into airport charges.
Personally I think it is ridiculous that this seems to have been inspired by fear of overseas investors. I find being ripped off by Kiwis every bit as annoying as being ripped off by Canadians. But, hey, it's the outcome that matters rather than the reasons behind it.
Of course the new rules aren't likely to make much difference to Auckland airport's lousy transport links, high parking fees or that ridiculous departure charge ... but they're a good step in the right direction.
