Advice to look to airlines in bid to cut flight costs
Industry representatives say airport economics are already tightly regulated, and the government should look to airlines in an effort to reduce ticket prices.
The comments were made in response to an airport regulatory review being carried out by the Ministry of Business, Innovation and Employment, as part of a wider review of the Commerce Act.
The review, which will look in part at the charges airports levy on carriers to use their facilities, will principally consider Auckland, Wellington and Christchurch Airports, and will end on May 23.
Other South Island airports are typically community-owned, for example through councils, although they are also likely to be affected by the review.
NZ Airports Association chief executive Billie Moore said airports were "disillusioned" by the 12th governmental review in as many years, and officials should look to dominant domestic airline Air New Zealand to curb soaring flight prices.
"Consumer complaints about the price of flying have made it clear that Kiwis want greater scrutiny on the airline market. Instead, this review appears to be a response to the international airline lobby ..."
Ms Moore said current regulations were already effective.
"The current information disclosure regime provides strong transparency and accountability while preserving the flexibility airports need [for] long-term infrastructure investment."
She said airports and airlines had different priorities, and airports were limited by negotiating with "one, dominant customer", Air New Zealand.
"The incentives of airports and airlines are different. Incumbent airlines have no incentive to agree to capacity increases at airports because they can price for yield, something Kiwis can see happening now as prices increase across regional routes."
On Monday, Associate Transport Minister in charge of Aviation James Meager said the government could look at encouraging competition from smaller carriers.
Ms Moore said competition was a more effective tool in reducing the cost of flying.
"No regional airline can viably scale up against the government-owned national carrier. Greater competition is needed for Air New Zealand in order to ensure [optimal] price and service quality."
She said routes with two carriers were typically 30% cheaper, and became 60% cheaper with three carriers competing.
Queenstown Airport chief executive Glen Sowry said he did not see a need to expand the current regulatory scheme to include Queenstown, despite it being 25% owned by Auckland Airport, which has recently come under criticism for its charges.
"Queenstown Airport is [majority-owned] by Queenstown Lakes District Council and is an important regional asset ... to the community we serve.
"Airports are highly regulated environments ... While Queenstown Airport is not a regulated airport under the Commerce Act, we [align] to the process the three regulated New Zealand airports follow."
The airport worked closely with client airlines in setting fees.
"[These] are a small fraction of the cost of flights, which are set by the airlines and are dynamic in response to market demand."
A Dunedin Airport spokeswoman said the airport did not wish to comment on the review, but looked forward to taking part.
richard.davison@odt.co.nz
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