Auckland Airport accused of gouging by Commerce Commission

  • 26/04/2018
Auckland Airport may be making an extra $47m in profits it shouldn’t.
Auckland Airport may be making an extra $47m in profits it shouldn’t. Photo credit: Getty

Auckland International Airport may be raking in too high a profit at the cost of airline passengers, the Commerce Commission says.

The airport is looking to make a return of 7.06 percent return on its assets between July 1, 2017, and June 30, 2022, the commission said in a draft report released on Thursday.

This was higher than the commission's mid-point benchmark of 6.41 percent, commission deputy chair Sue Begg says.

"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," she said.

Ms Begg said there may be legitimate reasons for Auckland Airport to target higher returns than the commission's benchmark, but her team were yet to be satisfied these were in the long-term interest of consumers.

The report comes as Auckland Airport is required to provide financial information to the commission so it can review the airport's pricing decisions and provide a greater understanding about its performance.

Auckland Airport's chief financial officer Phil Neutze says his team would submit a response to the commission's draft report so it could better clarify its pricing model.

"Auckland Airport continues to believe that its prices for the five financial years to 30 June 2022 are fair and reasonable given the approximately $2 billion investment the company is making in long-term infrastructure," he said.

He said average charges over the next five years would, in real terms, reduce by 1.7 percent each year for international passengers and increase by 0.8 percent per annum for domestic passengers.

A runway landing charge of $1.19 (excluding GST) per passenger would kick in from the start of the 2021 financial year, once construction of a second runway at the airport is confirmed.

During the review, the commission looked at the forecast cost of the airport's planned $1.8 billion terminal and aeronautical infrastructure redevelopment.

It accepted these redevelopments were necessary to meet increasing passenger numbers, Ms Begg said.

"We... look forward to the level of service quality improving over the long term as a result of these significant redevelopments," Ms Begg said.

NZN