Competition regulator criticises Christchurch airport's excessive profits

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The New Zealand Commerce Commission (NZCC) has criticised Christchurch International Airport’s pricing scheme, claiming that it will reap “excessive profits” over the next 20 years.

In a draft report prepared for the ministers of transport and commerce, the Commission says that the airport is targeting a return on investment of 8.9% over the next 20 years, higher than the 6.6-7.6% range it deems to be acceptable.

The Commission adds that the country’s information disclosure regulations did not discourage it from making excessive profits over the long term.

“Our draft finding is that information disclosure regulation has not had a significant influence on Christchurch airport,” says deputy chair Sue Begg. “In particular, information disclosure has not constrained Christchurch airport from targeting excessive profits over the next 20 years.”

Nevertheless, the Commission also noted that that the airport’s returns over the first five years of the 20-year period will be within its acceptable range, at 6.8%.

The airport’s chief executive, Jim Boult, welcomed the finding on its five-year returns, and added that it only sets its pricing over that time period.

"Beyond that, we are obliged to consult every five years with our airline customers and at that time will also consider points raised by the Commission," he says.

Airport pricing in New Zealand has been a controversial topic, with Air New Zealand publicly stating their belief that the country’s airports exploit their monopoly positions to overcharge on landing and other navigation fees.

The NZCC has recently conducted similar reviews of pricing at Wellington and Auckland airports.