MEDIA RELEASE 22 November 2007
Regulatory control provisions of the Commerce Act
Wellington International Airport Limited (WIAL) welcomes the Government’s decision to maintain a light-handed approach
to airport price regulation, but disagrees that changes to the regulatory control provisions of the Commerce Act are
necessary.
The Government’s overall intention of better economic regulation is to be applauded, but whether more equates to better
remains to be seen. Internationally the trend in most OECD counties is for less economic regulation, in particular as
regards airports.
WIAL supports the Government’s commitment to formally recognise that “regulation should ensure firms have incentives to
innovate and to invest in infrastructure.” Over the last decade, since the Government sold its 66% interest, Wellington
Airport has invested over $190 million in its facilities. It has been transformed from a converted factory to a regional
gateway. It has financed this investment by being very efficient and by growing its passenger services and property
income.
“What ever regulatory regime emerges from this process, it must ensure that dominant airlines cannot stifle investment
as they have endeavoured to do in the past and limit opportunities for competition. WIAL would not have been able to
accommodate Pacific Blue’s entry to the domestic market without the investment programme it is undertaking.
“While the Airport has been in a state of continuous improvement over the last decade, future growth will require
ongoing enhancement of airport facilities. There would be no prospect of expanding current services or attracting long
haul services without continued investment by WIAL,” said Mike Basher, Acting WIAL CEO.
The Government’s favouring of a consultative approach over negotiation is recognition of the merits of the current
system where, under the Airport Authorities Act, airports are required to extensively consult with airlines before
setting charges.
WIAL was conservative in its approach during the last period of pricing consultation with the airlines, announcing in
July an increase of 2.85% per annum for the next 5 years, or around 30c per airline ticket. This modest increase was
made in the context of a $100 million capital investment programme currently underway.
Ends