17 Jun 2015

Airport's revenue expected to take hit

1:50 pm on 17 June 2015

Auckland Airport's revenue is expected to be hit by an anticipated reduction in what it can charge airlines for aeronautical services.

Auckland Airport's

Auckland Airport's Photo: 123rf

The Commerce Commission is just beginning a review of the way it works out what prices electricity and gas network operators and airports can charge users.

The Commission has put out its first paper as part of the review of input methodologies used to determine the prices energy network companies and airports can charge.

The paper is seeking feedback on whether any changes are needed over the way risks and rewards are shared between suppliers and users, including the effect of solar power and electric vehicles on electricity lines services, as well as how to better assess airport profitability.

Transport analyst at Forsyth Barr Andy Bowley said given the Commission's past approach to what it considers is a fair rate of return, he expected Auckland Airport's profit growth to slow over the next five years.

Mr Bowley estimated the changes could result in Auckland Airport's regulatory earnings falling from 46 percent to 39 percent of its gross profit.

Auckland Airport will reset its prices in 2017.

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