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Ann: GENERAL: WIA: Wellington Airport questions C

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    • Release Date: 08/02/13 12:25
    • Summary: GENERAL: WIA: Wellington Airport questions Commission's report
    • Price Sensitive: No
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    WIA
    08/02/2013 10:25
    GENERAL
    
    REL: 1025 HRS Wellington International Airport Limited
    
    GENERAL: WIA: Wellington Airport questions Commission's report
    
    Wellington Airport is questioning some of the conclusions of the final
    Commerce Commission report issued today on its airport charges.
    
    Wellington Airport Chief Executive Steve Sanderson welcomed the report's
    findings that the airport conducted a transparent and consultative approach
    to price setting, promoted innovation and operational efficiency, and
    delivered a quality passenger experience with prudent capital investment.
    
    However, Mr Sanderson questioned the Commerce Commission's findings on the
    airport's forecast future returns.
    
    "Wellington Airport's effective rate of return is 8.1% which is in the range
    the Commerce Commission considers as reasonable," Mr Sanderson said.
    
    "The Commerce Commission's theoretical model, which looks at future pricing
    over the next five years and not actual returns, doesn't apply to the
    airport. The Commission's forecast return excludes commercial concessions
    that benefit the airlines. This means the report has overestimated the
    airport's returns in the future - the current charges are below the
    regulatory benchmark," Mr Sanderson said.
    
    Wellington's charges are between those charged by Auckland and Christchurch
    airports, and in the lower range of Australasian airports in terms of cost
    per passenger. The current average per passenger landing charge at Wellington
    is $11.39 and it is forecast to only increase by around 70 cents per year.
    
    "New Zealand's airport prices are low when compared with airports worldwide
    with good investment and innovation further demonstrating that the market is
    functioning well," said Mr Sanderson.
    
    "Wellington Airport provides strong incentives to support travel and tourism
    growth and the introduction of new air services, which is evident in the
    strong growth we have seen in the last year," Mr Sanderson said.
    
    The report's positive findings about the airport's transparency and
    consultative approach to price setting further demonstrated that the current
    regime was working. This view was reinforced by the report's postive
    benchmarking of airport service quality and innovation, Mr Sanderson said.
    
    "Over the last fifteen years Wellington Airport has invested $300 million in
    its capacity and service quality. Forecasts indicate around $100 million will
    need to be invested over the next few years to maintain the current
    standards, accommodate growth, safety requirements and air service
    connections. The investment decisions, both past and future, depend on an
    appropriate regulatory environment which has been the case to date."
    
    "We are confident the Ministers will recognise the investment that is
    required to accommodate growth for Wellington Airport and that on
    Australasian and World benchmarks its airport charges are in the low range."
    
    Mr Sanderson also noted that report supported the airport's pricing structure
    in promoting operational efficiency.
    
    Wellington Airport is also the most cost efficient in Australasia and
    undertakes disciplined, well managed, innovative investment in airport
    infrastructure, Mr Sanderson said.
    
    "We look to accommodate expected long term increases in demand by making
    better use of existing facilities, before looking to expand. The dual use
    international terminal and swing gates are examples of this," Mr Sanderson
    said.
    
    Notes for journalists and editors
    The Commission's report is on the effectiveness of the information disclosure
    regime for the setting of charges at Wellington Airport. The regulatory
    regime requires that Auckland, Wellington and Christchurch airports make
    public specified financial, quality and pricing information to ensure
    transparency when consulting on and setting airport landing charges. The aim
    is to ensure that the airports have similar incentives and pressures to
    suppliers operating in competitive markets.
    
    Wellington Airport was the first airport to have been reviewed following it
    consulted with airlines about setting airline prices under the Airport
    Authorities Act last year. This is also the first completed report in an
    overall assessment of the information disclosure regime for New Zealand's
    three main airports. The report for Auckland is due around June and
    Christchurch's by the end of the year.
    
    The Airport Authorities Act provides a legal framework for the airport to set
    sufficient price levels to operate the Airport and provide a fair return on
    the funds invested to Infratil's 16,000, mainly New Zealand, shareholders and
    Wellington City ratepayers. The Airport Authorities Act legislation was
    retained in Parliament's recent consideration of the Commerce Act and support
    by Treasury and the MED in the 2007 reviews of the proposed airport
    regulation at that time.
    End CA:00232752 For:WIA    Type:GENERAL    Time:2013-02-08 10:25:21
    				
 
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