AIA pushes ahead with landing hike

By Phil Boeyen, ShareChat Business News Editor

Wednesday 15th August 2001

Auckland International Airport is planning to go ahead with a 5% increase in landing charges from next month despite a possibility the charges may become subject to price control.

Last month the Commerce Commission issued a draft report on airfield pricing, indicating that Auckland is a likely candidate for price controls.

AIA has now filed its submission in response to the report. MD, John Goulter, says the company continues to believe that the preliminary assessment contained in the report is unsustainable.

"In its submission, Auckland Airport has illustrated a number of fundamental errors in Commission's working which, when corrected, removed any suggestion of a need for price control.

"In addition, the company does not agree with much of the economic rationale adopting by the Commission; especially in respect of the Commission's exclusion of land held for the second runway and the use of an historical cost base to value runways."

The draft report stated that land acquired or held to provide airfield activities in the future should not necessarily be included in the asset base for determining current prices of airfield activities.

However Mr Goulter says even using the economic principles adopted by the Commission, Auckland Airport's projected returns are below the Commission's target rate.

"Accordingly, the company confirms it will be proceeding with the 5 per cent increase in landing charges on 01/09/2001 which has been previously advised to the airlines following consultation process last year."

The commission did not recommend price controls for either Wellington or Christchurch airports.

Final recommendations are due to go to the Minister of Commerce by the beginning of November.

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