Wellington Airport returns within acceptable range   30 Jun 2015

Wellington Airport returns through 2019 within acceptable range, regulator confirms

By Jonathan Underhill

June 30 (BusinessDesk) - Wellington International Airport's revised landing fees mean the gateway's returns fall within an acceptable range, the Commerce Commission has confirmed.

The airport company owned by Wellington City Council and Infratil revised its landing fees after the commission previously found it was targeting excessive profits.

"As noted in the draft report released in April, the commission’s analysis estimates WIAL has set its prices targeting a return of 8.4 percent, which is just within the upper limit of an acceptable range of 7.4 percent to 8.4 percent," the regulator said in a statement. The period covered by the review is June 1, 2014, to March 31, 2019.

"We estimate that consumers will now be $33 million better off over a three-year period as a result of this process,” said deputy commissioner Sue Begg.

In its May submission on the commission's draft report, the Board of Airline Representatives New Zealand, the lobby group for airlines, noted that the airport company had made "significant adjustments" by applying the regulator's input methodologies for asset valuations.

However, for the airfield cost centre, "significant differences still remained," Barnz said.

The differences "arise from a situation of natural monopoly where there are still material issues which information disclosure has, to date, proved insufficient to address and where WIAL is misusing its market power to impose on airlines an outcome which does not reflect likely outcomes in workably competitive markets," it said.

Wellington, Auckland International Airport and Christchurch International Airport are required to disclose their pricing methodology under Part 4 of the Commerce Act. The latest round is the third under the Part 4 rules.

The commission said its final report doesn't include analysis of the airport's proposed $300 million runway extension because the company didn't include that in the latest 'price setting event.'

Infratil shares last traded at $3.11, and have gained 5.7 percent so far this year.

(BusinessDesk)

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