Post by flyjoe180 on Nov 23, 2007 9:16:25 GMT 12
Airports have given nervous approval to a review of the way they set landing charges for airlines, who say that fares will drop as a result.
Commerce Minister Lianne Dalziel announced yesterday that Auckland, Wellington and Christchurch airports would be regulated under the Commerce Act instead of the Airport Authorities Act.
The move will force the airports to provide more information about their charges, and could lead to price controls if the Commerce Commission considers it necessary.
Airlines hailed the change as a "considerable step forward" in their long battle against what they have regarded as excessive landing fees. Air New Zealand chief financial officer Rob McDonald said it would result in lower fares.
Board of Airlines Representatives executive director Stewart Milne said airlines had been lobbying for years for a review of the way airports could set their charges, and it would remove imbalances from the price-setting consultation process, which takes place every five years.
He said airlines were comfortable with the decision to retain the requirement for airports to consult airlines about pricing, rather than negotiate with them.
Wellington airport welcomed the retention of a light-handed regime, but was concerned that the changes might stand in the way of its ability to develop its assets.
The airport has increased its landing fees by 2.85 per cent a year for the past five years. Auckland International Airport increased its charges by 2.5 per cent over the same period.
Air New Zealand has applied for a judicial review of those increases, but the airports said yesterday that they were reasonable, given the huge investment programmes in recent years.
Wellington's acting chief executive, Mike Basher, said $190 million had been spent on the airport in the past 10 years, including a new domestic terminal. "Whatever regulatory regime emerges from this process, it must ensure that dominant airlines cannot stifle investment as they have endeavoured to do in the past and limit opportunities for competition."
Without the investment made in recent years, the airport would not have been able to accommodate Pacific Blue, which began flying on the domestic main trunk route last week, Mr Basher said.
Auckland International Airport chief executive Don Huse said it would take time for the details of the proposed changes to be worked through. "The airport sees real merit in greater transparency and certainty with respect to the regulatory environment."
But he insisted it was essential that incentives for timely investment in airport infrastructure remained in place under the new regime.
The airport was coming to the end of a $500 million four-year investment programme. Most of that money was being spent on expanding and upgrading the airport's aeronautical facilities, Mr Huse said.
A further $180 million would be spent on completing the international terminal's expanded arrivals area by the middle of 2011.
"Given the scale and long-lived nature of this investment programme and ongoing airport infrastructure investment, it is essential that there is regulatory stability and that the proposed changes do not erode fair and reasonable returns for the company."
Auckland airport had earnings before interest, tax and depreciation of $242.8 million on total revenue of $321.9 million.
Wellington airport's earnings before interest, tax and depreciation were $49.6 million on total revenue of $67.3 million.
The Board of Airlines Representatives has complained separately to the Commerce Commission about the way in which Wellington airport has treated $120 million in unforecast revaluations over the past five years as assets rather than income.
www.stuff.co.nz/4284795a13.html
Commerce Minister Lianne Dalziel announced yesterday that Auckland, Wellington and Christchurch airports would be regulated under the Commerce Act instead of the Airport Authorities Act.
The move will force the airports to provide more information about their charges, and could lead to price controls if the Commerce Commission considers it necessary.
Airlines hailed the change as a "considerable step forward" in their long battle against what they have regarded as excessive landing fees. Air New Zealand chief financial officer Rob McDonald said it would result in lower fares.
Board of Airlines Representatives executive director Stewart Milne said airlines had been lobbying for years for a review of the way airports could set their charges, and it would remove imbalances from the price-setting consultation process, which takes place every five years.
He said airlines were comfortable with the decision to retain the requirement for airports to consult airlines about pricing, rather than negotiate with them.
Wellington airport welcomed the retention of a light-handed regime, but was concerned that the changes might stand in the way of its ability to develop its assets.
The airport has increased its landing fees by 2.85 per cent a year for the past five years. Auckland International Airport increased its charges by 2.5 per cent over the same period.
Air New Zealand has applied for a judicial review of those increases, but the airports said yesterday that they were reasonable, given the huge investment programmes in recent years.
Wellington's acting chief executive, Mike Basher, said $190 million had been spent on the airport in the past 10 years, including a new domestic terminal. "Whatever regulatory regime emerges from this process, it must ensure that dominant airlines cannot stifle investment as they have endeavoured to do in the past and limit opportunities for competition."
Without the investment made in recent years, the airport would not have been able to accommodate Pacific Blue, which began flying on the domestic main trunk route last week, Mr Basher said.
Auckland International Airport chief executive Don Huse said it would take time for the details of the proposed changes to be worked through. "The airport sees real merit in greater transparency and certainty with respect to the regulatory environment."
But he insisted it was essential that incentives for timely investment in airport infrastructure remained in place under the new regime.
The airport was coming to the end of a $500 million four-year investment programme. Most of that money was being spent on expanding and upgrading the airport's aeronautical facilities, Mr Huse said.
A further $180 million would be spent on completing the international terminal's expanded arrivals area by the middle of 2011.
"Given the scale and long-lived nature of this investment programme and ongoing airport infrastructure investment, it is essential that there is regulatory stability and that the proposed changes do not erode fair and reasonable returns for the company."
Auckland airport had earnings before interest, tax and depreciation of $242.8 million on total revenue of $321.9 million.
Wellington airport's earnings before interest, tax and depreciation were $49.6 million on total revenue of $67.3 million.
The Board of Airlines Representatives has complained separately to the Commerce Commission about the way in which Wellington airport has treated $120 million in unforecast revaluations over the past five years as assets rather than income.
www.stuff.co.nz/4284795a13.html
