New Zealand's competition authority is reviewing the need for price controls at privatised airports after a dispute between airlines and Auckland airport.
Auckland International Airport is boosting landing fees by 19% over the next three years and has increased passenger departure taxes following a year of wrangling with airlines about its proposed charges.
The airport, which was privatised in 1998, claims its first fee increase since 1992 is needed to help cover the cost of a comprehensive upgrade. The airport is two years into a five-year NZ$140 million ($60 million) capital expenditure plan to rehabilitate its runway, taxiways and aprons. It has already enlarged and upgraded its international terminal.
Airlines, angered by the size of the increases, accuse Auckland of exploiting its monopoly at their expense. They are also worried that a similar dispute looms at Christchurch, where the airport is still conferring with them about a proposed rate increase. Stewart Milne, executive director of the New Zealand board of airline representatives, says matters at Christchurch have reached "a pretty critical stage".
Under legislation concerning airport privatisation, airports are permitted to review their charges every three years. While they must consult with airlines before any rate change, the law sets no cap on how much they are allowed to charge.
That same law obliges the Commerce Commission, New Zealand's competition watchdog, to conduct a review of whether or not airport price controls are needed. The previous government shelved that review, but that decision was overturned when Labour took office last December.
The commission admits that it lacks any power to investigate airline complaints about the fee hikes at Auckland, and can only consider them as part ofits broader inquiry into a need for price controls.
The inquiry is not due forcompletion until 2002, but pressure is growing to accelerate the timetable. Transport Minister Mark Gosche has agreed to meet with the airlines to discuss their concerns. n
Source: Airline Business
