Commerce Commission says Christchurch Airport still targets excessive return

Friday 22nd May 2015

Christchurch International Airport (CIAL) is still targeting excessive returns, the Commerce Commission says, after the airport provided clarification of its pricing methodology.

The Christchurch, Wellington and Auckland airports are subject to disclosure rules under the Commerce Act and the regulator then reviews their pricing decisions. A Commerce Commission report in February last year, citing Section 56G of the Commerce Act, noted that information disclosure regulation "appeared to have had little influence" on the airport's conduct or performance.

Its proposed prices over the 20 years from 2012 to 2032 targeted a return of 8.9 percent, which is higher than the commission’s view that an acceptable return is between 7.4 percent and 8.4 percent, the regulator said in a statement.

"Unlike Wellington International Airport, CIAL has not changed its prices in response to the Section 56G report," it said.

The regulator was providing feedback on CIAL's revised pricing information. Deputy Commissioner Sue Begg welcomed the airport's initiative to clarify its pricing methodology but said it hasn't revised its conclusions that the airport is seeking excessive returns.

“While we gain some reassurance from the fact that for the current pricing period the returns CIAL targeted are within an acceptable range, we remain concerned it is targeting a rate of return over the longer term that is above the commission’s estimated range of acceptable returns.” Begg said.

BusinessDesk.co.nz

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