Auckland Airport is spending $1.8 billion on infrastructure over five years. Herald aviation writer Grant Bradley checks on progress in the international terminal. Video / Greg Bowker
A transtasman airline lobby group will turn up the heat on airports this week, meeting with the Government and officials to push for new ways of setting prices.
Airlines for Australia and New Zealand (A4ANZ) is due to meet Commerce Minister Kris Faafoi just days after the Commerce Commission said in a draft finding that it was concerned Auckland International Airport was planning to make excessive profits on its regulated assets over a five-year period and this would lead to higher prices for passengers.
The airport, however, says it believes its charging regime is fair and reasonable.
Across the Tasman last week a regulator's report into Australian airports found that passengers were also paying higher ticket prices as a direct result of a rise in profits per passenger at each of the country's four largest airports.
The chairman of A4ANZ, Graeme Samuel, said the same report could have been written on New Zealand airports.
"The situation is the same and the light-handed regulatory touch is the same. Both are subject to the same regulatory remit which is look, monitor and inquire and publish but don't do anything else," said Samuel, who is a former chairman of the Australian Competition and Consumer Commission.
He said his eight years at the commission meant he was very familiar with monitoring, which was past its use-by date on both sides of the Tasman.
''The fundamental problem [is] that you've got monopolies. They will gouge and provide just satisfactory service in terms of quality.''
Transtasman airline rivals, Air New Zealand, Qantas-Jetstar, Virgin Australia and its budget arm Tigerair last year got together to form A4ANZ to lobby on issues such as airport operations and efficient access to infrastructure.
Samuel said he was surprised at the level of quality at Auckland Airport, which is going through a $1.8 billion rebuild, including improvements to public lounge areas, and next decade, a new domestic terminal.
He said that car sales promotions and retailers meant that in the domestic terminal passengers had nowhere to sit.
"They're extracting the rents from retails but for the passengers they're saying you haven't got any choice because this is the only place planes can land and take off and the airlines haven't got any choice either."
His group was not pushing for regulation of airport pricing as that was too heavy-handed.
''There is a half-way point available under legislation which is the negotiate-arbitrate model - you say to the airports and airlines negotiate but if they can't find an agreement to the terms being proposed the Commerce Commission can step in to arbitrate.''
The shadow of intervention by the regulator was important, he said.
That approach would not require a law change but could be achieved through a ministerial direction.
Although there was satisfaction with the information disclosure regime changes could strengthen the would cover the ability to the commission to point out any concerns about the information it was getting.
''The one significant change is if we do think that need to go any further we could do it by regulation — that's the threat.'' he said.
The commission will deliver its final report on Auckland Airport in September. In its draft report it said that during a five-year period to June 30, 2022, the airport was targeting a return on its regulated asset base of 7.06 per cent against the commission's mid-point benchmark of 6.41 per cent.
"This difference in target returns could result in customers paying an additional 61 cents per flight over the next five years, or put another way - Auckland Airport earning an additional $47 million in profits after tax," said the commission's deputy chair Sue Begg.
Auckland Airport is rebuilding as passenger numbers surge. Photo / Grant Bradley
A4ANZ also works with a body that represents all airlines operating in New Zealand, the Board of Airline Representatives. The board is pushing to have dividends that are now paid to shareholders spent on infrastructure to relieve the burden on customers.
Samuel said the airport's shareholders, including Auckland Council which holds 22 per cent, would be ''rubbing their hands with glee'' that customers will pay for capital expansion.
The airport has said it will ''engage the commission'' on the detail of the draft, adding that charges were only a fraction of the cost of air travel.
The commission oversees Auckland, Wellington and Christchurch airports but does not regulate retail facilities, car parking and access for taxis, shuttles and buses.
