Auckland Airport is lowering its price planned increases after the Commerce Commission said it was overcharging by nearly $200 million.
The competition regulator has published its final report on the airport’s next price-setting period, concluding its forecast revenue was excessive and targeted returns were too high.
It said the airport was targeting excess profit of $190m and its charges were too high, with businesses and consumers likely to end up carrying much of the cost-burden.
The commission said excess profit represented a targeted return of 8.73% from priced aeronautical activities – such as aircraft landing and passenger terminal charges – compared to the commission’s estimated reasonable return of between 7.3% and 7.8%.
“Price increases will fund investment needed to improve customer experience, build more resilient infrastructure and add additional capacity, but the increases are higher than what is needed to achieve these outcomes,” commissioner Vhari McWha said.
Auckland Airport said it would now discount airline charges for the final two years of the price-setting period, between 2022 and 2027, to 7.82%.
Chief executive Carrie Hurihanganui said the airport respected the regulator’s findings.
“Auckland Airport carefully balances how we set charges with the need to invest in the future resilience and capacity requirements of New Zealand’s gateway airport and one of the country’s most critical infrastructure assets,” she said.
“To support this, investors require fair returns and a stable regulatory regime.”
The commission found the airport’s forecast investment fell within a reasonable range.
“While views on the type, size and timing of the investment differ among the airport’s customers, our analysis shows Auckland Airport engaged multiple third-party experts to assist with costing its investment plan and considered a wide range of options for its new terminal building,” McWha said.
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