Current Regulatory Regime Appropriate

12 August 2005

Current regulatory regime appropriate, according to airports

“Recent Board of Airline Representatives (BARNZ) media comments promoting more regulation of New Zealand airports are opportunistic and misrepresent the actual airport situation in New Zealand”, Auckland International Airport Limited (AIAL) chief executive Don Huse said today.

BARNZ said in a statement that there has been a 40 per cent increase in aeronautical revenue per international passenger at Auckland over the last five years.

“We don’t understand where that figure comes from, considering that all the data is publicly-available, and the increase per international passenger from total AIAL aeronautical revenue for the last five years has in fact been from $18.06 to $20.44, an increase of 13.2 per cent, or around three per cent each year, in line with inflation.”

Overall aeronautical revenue has increased 44 per cent, while passenger numbers have increased by 34 per cent.

Airports earn revenue from two sources: ‘aeronautical’ which is made up of landing charges, terminal services charges and departure fees; and ‘non-aeronautical’ which is made up of duty-free concessions, car parking, property rentals and other areas of the business. At Auckland, under 50 per cent of the company’s revenue is from the aeronautical side of the business.

“New Zealand airports were established under a light-handed regulatory regime, but with a subsequent amendment which requires annual disclosure of key aeronautical information. This enables meaningful evaluation of aeronautical returns and provides the basis for the extensive consultation process.”

The regime has been subject to various legal and regulatory reviews over the years. “The decision has always been that the current process of information disclosure and consultation with key stakeholders (such as the airlines) works well.”

The airport says that a comparison can be drawn with the Australian airports which started out with a price regulation regime and have now moved to a disclosure regime similar to New Zealand’s.

Extensive consultation that airports undertake with airline customers involves arriving at sensible commercial outcomes which balance the need to accommodate continued passenger growth through the airport against the cost to the various users.

At Auckland there is a comprehensive consultation process currently underway with the airlines addressing both the nature of new facilities required, and their cost recovery.

Mr Huse said that, “Given it is an election year, it is not surprising, although disappointing, that the airlines should seek to put pressure on this consultation process by promoting the need for more regulation. The arguments presented are not new.

“The reality is that New Zealand’s airports are of a high standard internationally. They are fundamental infrastructure assets working to the benefit of all New Zealanders. Government policy focus right now is on other key areas of transport infrastructure provision and that seems entirely appropriate given New Zealand’s success in providing world-class airport infrastructure.”

ENDS

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