Government will not impose controls on airports

The Government has decided not to impose controls such as charging of fees at Auckland, Wellington and Christchurch Airports, Commerce Minister Lianne Dalziel said today.

The decision comes after a four-year Commerce Commission inquiry which recommended controls be placed on Auckland Airport, but were not necessary for Wellington and Christchurch.

Ms Dalziel said controls were "not appropriate" at the airports and would have adversely affected the public.

"I cannot recommend control unless I am satisfied that the goods or services meet the thresholds for control to be imposed," she said at a press conference this morning.

She could only justify imposing control if competition was limited or likely to be lessened if controls were not in place, or if control was in the interests of the public.

Ms Dalziel said she took into account matters identified by the commission, including the level of net benefit to airlines, the possible costs of control, net public benefits, and the impact of control on other airport activities.

She received advice from the Ministry of Economic Development over alternative options to control, what message control might have sent and the effect of any decision on market behaviour by airport companies and across the economy generally.

"With respect to Auckland, it would be fair to say that when I matched the negative net public benefits of control with the net benefits to (airlines), that this carried considerable weight in terms of my decision.

"Although the benefit to the airlines would have been a 3.1 per cent reduction in airport charges...if the airlines passed on the full reduction in charges to passengers, it would result in approximately a 35 cent reduction in the average price of a one-way ticket.

"For this minuscule benefit, the cost imposed would have been significant."

Ms Dalziel thought it was unlikely the airports would take advantage of the lack of controls and hike prices further.

A review by Transport Minister Paul Swain on airports legislation was started before the current airport review, and was put on hold until Ms Dalziel had made her decision over controls.

She expected Mr Swain to reinstate the legislation review which would keep some restrictions on airports.

The airports had argued against any price controls, saying airlines worked together in the negotiations and airports were legally forced to consult on charges.

Ms Dalziel agreed there would be some adverse effects to airlines, but not enough to outweigh the public interest.

Wellington Airport said in February it would raise landing fees and ground service fees to airlines by 78 per cent.

Air New Zealand then said it would pass on the extra cost to customers.

Air NZ refused to pay and Wellington Airport has gone to court seeking the approximately $7 million in unpaid fees.

Air NZ responded to the lawsuit with legal action of its own, asking the High Court for a judicial review of the price hikes. The airline claimed Wellington Airport failed to consult in good faith and the fees were predetermined despite lengthy negotiations.

- NZPA