Latest / Best of Business / Cath O'Brien: BARNZ Executive Director on Auckland Airport cutting its airline charges after Commerce Commission investigation

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Cath O'Brien: BARNZ Executive Director on Auckland Airport cutting its airline charges after Commerce Commission investigation · Best of Business

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  Speaker 1: Right I and Bredge.
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  Speaker 2: Commerce Commission found that Auckland Airport has been overcharging airlines
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  Speaker 2: since twenty twenty three. The airport lowered their upcoming price
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  Speaker 2: increases after being found to have overcharged by one hundred
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  Speaker 2: and ninety million dollars. Barnes executive director Katho Brian's with us, Now,
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  Speaker 2: kath good evening, Good evening, Ryan, How is it possible
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  Speaker 2: to overcharge by that amount without realizing what you're doing?
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  Speaker 3: Oh? The wonderful thing in New Zealand is that airports
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  Speaker 3: can set prices as they see fit, which means that
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  Speaker 3: they can set their target return kind of as they wish,
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  Speaker 3: and they do that, and then a couple of years
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  Speaker 3: later the Commerce Commission comes along and has a little
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  Speaker 3: look at that and in this case has found that
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  Speaker 3: it's a little bit excess. So Auckland Airport has very
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  Speaker 3: slightly lowered those prices or that all that target return,
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  Speaker 3: which has an effective lowering the prices, and then they
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  Speaker 3: will gaily carry on increasing prices to cover the infrastructure. Happily.
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  Speaker 2: Ever after how does this impact airlines? How is it
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  Speaker 2: impacting airlines?
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  Speaker 1: Oh?
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  Speaker 3: Look, you know the age old problem of Auckland Airport.
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  Speaker 3: You know this this monopoly of monopoly airports that is
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  Speaker 3: seventy five percent or thereabouts of the traffic in Too
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  Speaker 3: New Zealand. You know, is building a substantial you know,
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  Speaker 3: airport building. It essentially a new airport to replace the
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  Speaker 3: old one. And that's costing something like six billion odd
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  Speaker 3: dollars which will be recovered all from airlines flying here.
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  Speaker 3: And that has the effect of raising prices for airlines
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  Speaker 3: all the time. And this report today is just about
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  Speaker 3: the target return or the profit margin that Auckland Airport
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  Speaker 3: can also recover as well as the cost of the build.
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  Speaker 3: But we still have to pay for the cost of
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  Speaker 3: the build. So that's the real challenge, is that prices
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  Speaker 3: will continue to rise for years and years and years.
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  Speaker 2: That's your big bug bear, isn't it. It's the build
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  Speaker 2: not not yes, but it really is. But if we
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  Speaker 2: will all get a bit of airport out of it,
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  Speaker 2: and if we don't invest now, it'll cost us more tomorrow.
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  Speaker 3: Yeah, look totally. And if we we do need to invest,
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  Speaker 3: and we do need to improve the airport. But I
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  Speaker 3: am not so sure that we need to spend you know,
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  Speaker 3: upwards of six billion odd dollars without even getting a
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  Speaker 3: second runway, you know, to get to get the job done.
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  Speaker 3: And what concerns me more is that the increasing prices
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  Speaker 3: may impact demand for destination. New Zealand. Auckland Airport is
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  Speaker 3: already seeing flat demand for air services, and that would
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  Speaker 3: be fine if airport's all over the world we're also
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  Speaker 3: seeing flat demand.
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  Speaker 2: Yeah, but they're not. But they're not typle of recovering
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  Speaker 2: quicker than us. So have we got like the Ferrari
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  Speaker 2: if we're comparing this to the ferries, Have we got
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  Speaker 2: a Ferrari version of an airport upgrade when what we
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  Speaker 2: need is a Toyota?
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  Speaker 3: Is that what you're saying, Well, certainly, we've got a
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  Speaker 3: very expensive airport upgrade that includes a wonderful road that
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  Speaker 3: goes all the way to a shop malland and eventually
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  Speaker 3: we'll have to include a bridge to join from the south,
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  Speaker 3: you know, replacing that connection because of the traffic to
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  Speaker 3: the shopping mall. And we've got an extensive property portfolio
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  Speaker 3: that surrounds the airport, none of them come from which
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  Speaker 3: actually has to go into the airport building. All of
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  Speaker 3: that is recovered from prices. So we have this regulatory
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  Speaker 3: setup which is actually doing New Zealand as a disservice.
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  Speaker 3: And one of the great things about this Commerce Commission
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  Speaker 3: report that's come out today is that it actually canvases
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  Speaker 3: the sorts of things, sorts of other regulation that policymakers
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  Speaker 3: could apply if they so chose, and if there was
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  Speaker 3: to be an investigation, these are the sorts of things
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  Speaker 3: that we would consider. And so I think, you know,
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  Speaker 3: really that places the ball firmly in Minister Simpson's court,
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  Speaker 3: the Minister of Commerce, to see whether he will make
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  Speaker 3: a move.
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  Speaker 2: Interesting, well, they've certainly got a nap type for making moves.
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  Speaker 2: At the moment, it might be that you've timed it right, Keith.
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  Speaker 2: Thank you very much for your time. Appreciate it. Keith O'Brien,
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  Speaker 2: Executive director of Barnes.
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