Call for regulation of airport

File photo / Mark Mitchell

An airline industry body is urging the Government to regulate Wellington International Airport in the face of proposed price rises it says will hit passengers.

The Board of Airline Representatives New Zealand (Barnz), an Auckland-based body which represents 21 airlines, said the airport had blatantly ignored Commerce Commission principles for airport pricing.

The airport was proposing to lift aeronautical revenue paid by airlines from $55 million this year to $95 million in 2016/17, Barnz said.

The proposal would over-charge airlines by $117 million over five years - compared with the Commerce Commission's method - and the charges would be passed on to passengers, it said.

Current prices should be reduced by 10 per cent and held for five years when applying the commission's framework, Barnz said.

Barnz executive director John Beckett said the only way forward was for the Government to impose stronger regulation on Wellington Airport under the Commerce Act.

"Otherwise, the airport will just continue ratcheting up its asset values and the return on them in order to keep earning higher and higher monopoly profits at the cost to travellers using the airport," Beckett said.

Wellington International Airport spokesman Greg Thomas said the pricing proposal was the product of six months of consultation with Barnz and airlines.

"The proposed charges are in the middle of the range of Australasian airports and in between prices at Auckland and Christchurch Airport," Thomas said.

Wellington Airport said that under the proposal, airline charges for international services per passenger would fall and domestic charges would rise, with an overall increase each year of less than 70c per passenger per flight, or $3.37 in real terms over five years.

Passenger numbers were forecast to rise from 5.2 million next year to 6 million in 2017.

Over the next five years, the airport expected to invest $67 million in facilities to cater for existing demand and growth, Thomas said.

"Airports are entitled to set prices to recover these costs and ensure a fair return is provided to the owners of the airport, in our case Wellington City ratepayers and Infratil's 15,000 shareholders."

Aeronautical revenue in real terms, adjusted for inflation, under the proposal would rise to $84 million by 2016/17, he said.

The proposed price levels had been calculated using independent advice from expert valuers and consultants in accordance with accepted methodology for price setting under the Airport Authorities Act, Thomas said.

"The Commerce Commission guidelines relate to information disclosure and benchmarking; they are not intended or required to be used to set prices."

The consultation was expected to run into next year and the airport would consider Barnz's and other responses to its initial proposal during the coming weeks.

New aeronautical prices would apply from April next year.

Beckett said Barnz had not yet seen pricing proposals from Auckland and Christchurch airports.

"At the moment all I can talk about is Wellington."