The Commerce Commission has today published its final report on Christchurch International Airport Limited’s 2022 – 2027 price setting event and has concluded that the airport’s estimated cost of capital and target profit are reasonable.
Commissioner Vhari McWha says the Commission is satisfied Christchurch Airport is not targeting excessive profits when setting its landing and passenger charges. These charges can influence the prices for both domestic and international flights in and out of the city.
“Christchurch Airport chose to focus its approach to setting 2022–2027 prices on continuity, predictability and transparency. The Airport is maintaining a simplified per passenger pricing structure but will now only charge for either arrival or departure of transferring passengers, rather than both. This is in line with the practices of overseas airports,” says Ms McWha.
Price setting events usually occur every five years, and this is Christchurch Airport’s fourth since information disclosure regulation was put in place. The consultation papers, submissions and the final paper for this price setting event can be viewed in full on the Commerce Commission’s website.
The Commission expects to release a final report for Auckland Airport’s fourth price setting event later in 2024. Wellington Airport is currently preparing for its fifth price setting event.
Background
Christchurch, Auckland and Wellington international airports are subject to information disclosure regulation under Part 4 of the Commerce Act. This improves transparency of the airports’ performance around profits, investment, pricing, and service levels.
The Commission does not regulate the prices charged by the three airports. They may set prices as they see fit, but are required to consult substantial customers, like airlines, on charges and any major capital expenditure plans.
The Commission publishes its reviews of the airports’ price setting outcomes so that their conduct and performance can be scrutinised by interested parties including the public. This can influence the airports’ behaviour and decisions in the future. To date, the airports have been responsive to the Commission’s review conclusions. For example, in 2019 Auckland Airport reduced its charges by $33 million following the Commission’s review of its third price setting event.
