15 Oct 2013

Commission flags airport overpricing

12:57 pm on 15 October 2013

The Commerce Commission has found that Christchurch International Airport is proposing to charge excessive prices over the next 20 years.

In a draft report released to the Ministers of Commerce and Transport, the watchdog says the airport's proposed prices target a return of 8.9%.

The commission says the figure is significantly higher than what it views as an acceptable rate of return of 6.6 - 7.6%.

However, it did find that the airport is not targetting excessive prices for the first five years of the 20-year period.

It believes that is due to the impact of the Canterbury earthquakes, rather than its information disclosure regime.

The regime used to assess the prices requires airports to provide financial information, asset valuations, pricing methodologies and forecasts.

Airline lobby group the Board of Airline Representatives says the commission's findings show firmer regulation is needed.

Executive director John Beckett says he was surprised that the commission found the price was in an acceptable range over the initial period, and it seems the airport's intention had been to push prices even higher in the future.

Christchurch International Airport says it is considering the draft report and is disappointed by some of the comments in it.

However, it says the commission's report has endorsed its pricing for the current pricing period and the watchdog does not have concerns with its performance in many areas.

Earlier this year, the Commerce Commission criticised Wellington airport's price setting.