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Process and issues paper released for review of Auckland and Christchurch Airport prices

20 October 2017

The Commerce Commission today released a process and issues paper for its review of the prices Auckland and Christchurch International Airports have set to apply for the period 1 July 2017 to 30 June 2022.

Under Part 4 of the Commerce Act, which regulates markets where there is little or no competition, the airports are subject to information disclosure regulation. While the Commission does not regulate the prices the airports charge, its role is to review airport pricing decisions to promote greater public understanding about their performance. 

Commission Deputy Chair Sue Begg said the paper outlines how the Commission intends to approach the review. “Areas we propose to focus on include the reasonableness of the airports' target returns, forecast capital and operating spending, and the efficiency of pricing,” Ms Begg says.

The Commission welcomes submissions on the paper by 28 November 2017 by email to regulation.branch@comcom.govt.nz.

The Commission intends to release its draft report for Auckland International Airport in March 2018 and for Christchurch International Airport in May 2018. Interested parties will be invited to submit on both. The final reviews for both airports are expected to be released in August 2018. 

The paper and related information can be found here.

Background

Auckland, Christchurch and Wellington International Airports are subject to information disclosure regulation for specified airport services.  These services include aircraft, freight, airfield and passenger terminal activities undertaken by the airports. The regulation does not cover other services such as car parks and retail facilities. The aim of this type of regulation is to improve transparency about how regulated businesses are performing in order to influence performance through greater public understanding.

The Commission reviews the airports’ pricing decisions in a summary and analysis capacity. We do not regulate the prices the three airports charge. Airports may set prices as they see fit, but must consult with substantial customers, like airlines, on charges payable and on any major capital expenditure plans.

The Commission’s review of the price setting events for Auckland and Christchurch Airport is the second of its kind for both airports since information disclosure requirements were set under Part 4. The first included a review of the effectiveness of the information disclosure regime and was undertaken in 2013-2014. Information on this review can be found here.

The Commission is expecting to review Wellington International Airport’s price reset in 2019.