Government decision on airports a win for consumers - Air New Zealand

The cost of travel is set to fall following the Government’s decision today to change the way it regulates airports.

Air New Zealand Chief Financial Officer Rob McDonald has applauded the Government’s decision to introduce meaningful regulation that will provide controls over the charges imposed by Auckland, Wellington and Christchurch International airports under the Commerce Act, saying it will materially benefit customers.

“It has been accepted by the Government that the current regime is both unsatisfactory and lacks credibility and robustness. We are not getting outcomes that would occur in a competitive market,” says Mr McDonald.

“Auckland and Wellington airports have long treated their customers as cash cows, generating outrageous levels of profit at the expense of consumers.

“Customers travelling through Auckland International Airport Ltd are being stung the hardest – recent analysis by PwC reveals that AIAL alone is generating more than $90m in excessive revenue annually. A new regulatory regime will in the future hopefully provide the scope to allow the excess revenues of the past to stay in the pockets of the travelling public. The regulatory arbitrage that has been relentlessly exploited is now closed.”

As a result of today’s decision Air New Zealand is calling on AIAL and WIAL to immediately withdraw all of their recently imposed pricing increases, on the basis that they clearly do not conform to a number of the Commerce Commission’s well-established principles.

“Air New Zealand has worked hard over the past three to four years to reduce costs with the objective of delivering everyday low fares to the travelling public. Unfortunately airfares have been higher than necessary as airports have kept raising their prices in direct conflict to Air New Zealand’s objective of lowering fares.”

Mr McDonald says Air New Zealand is committed to directly passing on lower airport charges to consumers, which would result in lower airfares, in turn helping stimulate demand for travel.

Mr McDonald says the Government’s decision to tighten regulation and monitor the way airports are setting charges vindicates the strong position held by Air New Zealand and other airlines that airports have been overcharging consumers.

Mr McDonald says the airline is looking forward to working with the Commerce Commission and government officials to develop a set of rules that provide fair and efficient pricing for all consumers.