Auckland Airport will lower its heavily-criticised airline passenger charge increases, following an investigation by the Commerce Commission into Price Setting Event 4 which found the airport’s forecast revenue is ‘excessive’ and its targeted returns are ‘unreasonably high’.
Over the next two financial years the airport will lower its airline passenger charges by an average of about $1.10 per passenger for regional travel (to $9) and cut $1.70 per passenger for domestic jet travel (to $12.80). Charges per passenger for international travel will drop $4.80 to $38.90.
. . . Reasonable
The updated charges are within the range considered reasonable by the Commerce Commission. The airport’s ceo Carrie Hurihanganui saying she respects
the regulator’s findings. “The airport’s decision to discount PSE4 prices demonstrates the regulatory regime working as it’s intended to,” she adds. Hurihanganui does note that AKL carefully balances how it sets charges with the need to invest in the future resilience and capacity requirements. The airport’s charges will remain at or below other regulated New Zealand airports during PSE4, and Hurihanganui says that AKL would then take on board feedback from the report on the airport’s approach to PSE5 and PSE6 pricing.
. . . Upgrades OK
At the same time the Commerce Commission is supporting the airport’s planned upgrades, stating that its forecast investment falls within a reasonable range. Hurihanganui says that AKL is ‘really heartened’ that the commission has confirmed that AKL is investing at a reasonable level to ensure the future resilience of New Zealand’s gateway airport. “We are pleased the commission acknowledged the importance of timely investment, particularly the delivery of vital runway and resilience upgrades,” she adds.
. . . Airlines
As to the beef the airport company has had with airlines over the investment, the Commerce Commission says while airlines are a key customer group, they do not always represent the views of other airport customers such as passengers, and that airline interests may not always be aligned. “That is why we have a regulatory regime designed to allow airports to invest in assets that serve the longterm interests of consumers,” says Hurihanganui. “Increased capacity is a good example of this … Airlines may not support it, but it’s good for passengers because it enables more airline competition which puts downward pressure on airfares.”