Ann: GENERAL: WIA: Wellington Airport questions d

• Release Date: 02/11/12 16:32
• Summary: GENERAL: WIA: Wellington Airport questions draft report's view on pricing
• Price Sensitive: No
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WIA
02/11/2012 14:32
GENERAL

REL: 1432 HRS Wellington International Airport Limited

GENERAL: WIA: Wellington Airport questions draft report's view on pricing

Wellington Airport is reviewing and evaluating the conclusions of a draft
Commerce Commission report issued today on airport charging. The draft report
found that the regulatory regime is working well in some areas, but the
airport is questioning the draft findings on its forecast return.

"Wellington Airport's targeted effective rate of return is 8.1% which is at
the lower end of the Commerce Commission's published cost of capital for
airports at the time of price setting. While the Commission has focused on a
forecast return of 9.5%, they have not taken into account the airport's
commercial concessions. The current pricing is below what the Commission
considers as reasonable," said Steve Sanderson, Wellington Airport's Chief
Executive.

"It has been recognised that the airport conducted a transparent and
consultative approach to price setting, promotes appropriate innovation and
delivers a quality passenger experience. The Commission has also supported
the airport's pricing structure in promoting operational efficiency."

The current airport charge on average per passenger is $11.11 at Wellington.
By comparison Sydney Airport's average charge is nearly $16 which is 40%
higher than Wellington's.

"The draft report was released this morning and is a detailed technical
document that we are working through. 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," Mr Sanderson
said.

Wellington's new charges introduced earlier this year are between those
charged by Auckland and Christchurch airports, and in the lower range of
Australasian airports in terms of cost per passenger. Wellington Airport's
pricing also provides strong incentives for growth and the introduction of
new services. Jetstar recently announced an increase in capacity of 50% or
500,000 seats.

"We are confident that further detailed analysis and benchmarking of airport
services and pricing will highlight the effectiveness of the current
regulatory regime, which will enable the required $100 million investment in
travel and tourism infrastructure forecast to be spent at Wellington to
accommodate growth, safety requirements and air service connections over the
next five years," Mr Sanderson said.

The Commission's draft 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 charge. The aim is
to ensure that the airports have similar incentives and pressures to
suppliers operating in competitive markets.

Wellington Airport is the first airport to have been reviewed following its
setting of prices under the Airport Authorities Act earlier this year. This
is also the first step in an overall assessment of the information disclosure
regime for New Zealand's three main airports.

Enquiries to
Greg Thomas
Wellington Airport
021430435
[email protected]
End CA:00229279 For:WIA    Type:GENERAL    Time:2012-11-02 14:32:35