Media Releases

Commission releases draft amendments to airport land valuation rules

10 November 2015

The Commerce Commission has today released draft amendments for consultation on the application of the airport land valuation rules as part of the input methodologies review.

The Commission announced in July this year that it would fast track this tranche of work ahead of the main review to provide greater certainty before the next airport price setting events in mid-2017.

Chair Dr Mark Berry said the Commission was now seeking submissions on the draft amendments relating to the application of the market value alternative use (MVAU) valuation methodology for airport land. The matters covered by the draft decision include the steps involved in determining MVAU, as well as special assumptions and practical valuation requirements.

“Transparency and predictability in relation to asset valuation are important characteristics of an effective light-handed regulatory regime. We remain on track to complete this work by February 2016, which will ensure Auckland and Christchurch airports can prepare updated land valuations, should they wish to do so, well in advance of their next price-setting events in 2017,” Dr Berry said.

Read the draft decision. Submissions are due by 5pm 8 December 2015 and cross submissions are due by 12pm 18 December 2015.


What is the market value alternative use (MVAU) valuation methodology?

The MVAU is the valuation method airports are required to apply if they choose to revalue airport land under the Commerce Act (Specified Airports Services Methodologies) Determination 2010.

Is this decision related to Wellington Airport’s proposed runway extension?

Wellington Airport’s proposed runway extension is not directly relevant to the draft amendments released today and has no more of a bearing on the main input methodologies review than other assets owned by the airport.

What are the Input Methodologies (IMs)?

The IMs are the upfront rules, requirements and processes that apply to regulation in New Zealand. Under Part 4 of the Commerce Act, the Commission is required to set and apply IMs to regulated electricity lines services (distribution and transmission), gas pipelines (distribution and transmission) and specified airport services.

What is the IM review?

The IM review is the opportunity to assess whether there are any necessary changes to the IMs to more effectively promote the long-term benefit of consumers. We do this review in consultation with all stakeholders. The Commerce Act requires the Commission to review each IM within seven years of its date of publication and, after that, at intervals of no more than seven years.

The Commission intends to complete the main IM review by December 2016. Review of the application of the airport land valuation rules (the focus of this media release) is being fast tracked for completion ahead of the main IM review to provide greater certainty before the next airport price setting events in mid-2017.

Previous media releases

All previous releases on the IM review can be found here.