Latest / Best of Business / Dr John Small: Commerce Commission Chair explains why they won't be investigating the cost of flying

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Dr John Small: Commerce Commission Chair explains why they won't be investigating the cost of flying · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks be follow
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  Speaker 2: Now. The Commerce Commission, the Commers Commission, has said it
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  Speaker 2: will not conduct a market study into domestic air travel.
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  Speaker 2: This is of course been a topic of conversation a
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  Speaker 2: lot lately the price of air New Zealand tickets. There
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  Speaker 2: have been calls for a study, and so doctor John Small,
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  Speaker 2: the chair of the Commers Commission, has pinned in an
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  Speaker 2: opinion piece on this today and he's with us now Hey.
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  Speaker 3: John, Hey, good aspening Heather, John.
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  Speaker 2: So take it from your opinion piece that basically the
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  Speaker 2: reasons that you're not going to intervene is number one,
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  Speaker 2: it's expensive to fly a plane. Number two, it's even
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  Speaker 2: more expensive to fly a plane on regional routes. So
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  Speaker 2: nobody wants to compete in number three in the parts
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  Speaker 2: where it really matters, like the big the big jet flights,
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  Speaker 2: they've got competition. Is that about right?
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  Speaker 3: Uh, that's a reasonable summary. Year Also, I think you
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  Speaker 3: know at the moment, competition on the main trunk lines
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  Speaker 3: is a bit hand put by by the fact that
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  Speaker 3: their intept's got a bunch of planes that are out
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  Speaker 3: of service. But yeah, generally speaking, that's right. It's very
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  Speaker 3: expensive to fly to fly regional routes that are quite
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  Speaker 3: sure and don't have a lot of demand on them.
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  Speaker 2: Okay, So the allegation that's been laid at the feet
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  Speaker 2: of in New Zealand at the moment is basically that
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  Speaker 2: it's jacking up its prices on those big on the
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  Speaker 2: domestic routes in order to make more money. Is that fair?
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  Speaker 2: Are they allowed to do that?
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  Speaker 3: Well, there's there's no law against charging high prices. That's
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  Speaker 3: that's the reality of things in New Zealand. If it's
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  Speaker 3: a monopoly on a monopoly route, it's potentially able to
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  Speaker 3: be regulated, but that would require quite a bit of
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  Speaker 3: investigation to make sure that you weren't you weren't overreaching
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  Speaker 3: to do that, and that's not really that's not really
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  Speaker 3: a competition issue. That's a regulatory issue. So from the
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  Speaker 3: point of view of competition, you know, we're not we're
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  Speaker 3: not particularly happy with what we see. We're still still
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  Speaker 3: keeping a really close eye on it, but there's nothing
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  Speaker 3: that we saw that's going to warrant the effort that
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  Speaker 3: would go into a market study to I mean, we've
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  Speaker 3: already found out a few things that are going to
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  Speaker 3: be helpful and so yeah, our viewers that will keep
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  Speaker 3: a close eye on it and see how it develops.
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  Speaker 2: What do you in New Zealand have a monopoly on
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  Speaker 2: most of the regional routes.
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  Speaker 3: Well, there's some regional routes that don't fly, and that's
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  Speaker 3: part of the issue that people have been complaining about
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  Speaker 3: them with drawing services on routes that are and you
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  Speaker 3: have to assume that those routes are unprofitable otherwise that
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  Speaker 3: still be there. But yeah, I mean, so there's some
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  Speaker 3: routes where there are a monopolist. There's some routes where
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  Speaker 3: smaller airlines are a monopoly, and there's been plenty of
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  Speaker 3: I mean reason about a coverage about particular smaller airlines
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  Speaker 3: even when they're flying monopoly routes, they're really struggling.
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  Speaker 2: So on the monopoly routes, is there a case to
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  Speaker 2: be made for regulation there?
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  Speaker 3: Potentially, But that's a different matter to a market study,
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  Speaker 3: which is a competition issue. So as I say, we're
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  Speaker 3: still looking at this. We talked to the airport's pretty
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  Speaker 3: soon to get some more information from them. It's not
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  Speaker 3: a there's not a once and for all things. This
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  Speaker 3: is where we are at the moment.
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  Speaker 2: Why did you decide to write this? What made you
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  Speaker 2: write this editorial?
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  Speaker 3: We thought it'd be a good idea. Well, we did
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  Speaker 3: the work first of all, because we are always looking
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  Speaker 3: for ways to improve competition, and market studies are at
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  Speaker 3: all for that. So we thought, okay, that seems like
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  Speaker 3: this a bit of an issue here, let's have a
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  Speaker 3: good look. So we've got a really cracked team together
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  Speaker 3: for about a month or so and had a good
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  Speaker 3: look at it, and then we thought, well, let's put
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  Speaker 3: it out there so people know what we found and
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  Speaker 3: were feeling.
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  Speaker 2: Were you feeling like you were being criticized for not
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  Speaker 2: doing it? It felt like you had to come to your own.
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  Speaker 1: Describe defense of it.
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  Speaker 3: No, No, not at all.
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  Speaker 1: No.
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  Speaker 3: But I mean we're allowed to initiate market studies on
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  Speaker 3: our own volition or the government can us too, so
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  Speaker 3: they could still tell us to if they wanted to so,
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  Speaker 3: but we're always looking for ways to improve competition, and
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  Speaker 3: so that's the reason we looked at it, and having
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  Speaker 3: looked at it, thought might as we tell people, John, it's.
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  Speaker 2: Good to talk to you. Thank you for your time.
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  Speaker 2: I really appreciate it. That's doctor John Small, the chairperson
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  Speaker 2: of the Commerce Commissioning.
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