The International Air Transport Association (IATA) has called for urgent reform of New Zealand’s economic regulatory framework for airports following the New Zealand Commerce Commission’s review of Auckland Airport’s Price Setting Event 4.
“It is not surprising that the Commerce Commission has concluded that Auckland Airport’s charges are excessive, ranging from NZD 150 million to NZD 226 million. While the airport has responded by lowering its charges over the next two years, the review process highlights significant flaws in the current regulatory framework. It is clear that the existing system is not fit for purpose and urgently requires reform,” said Dr. Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia Pacific (ad interim).
IATA expressed concerns regarding the current regulatory framework and highlighted several key issues:
- Regulatory Laxity: The existing “light-touch” approach to regulation allows Auckland Airport to set its aeronautical charges without adequate oversight. As the sole monopoly provider, the airport can manipulate the regulatory process by initially setting high prices and subsequently lowering them in response to regulatory reviews—or even ignoring the review altogether.
- Exclusion of Non-Aeronautical Revenues: The Commerce Commission currently does not oversee non-aeronautical activities, which generate much higher returns for the airport. This exclusion undermines the effectiveness of the regulatory process in ensuring fair pricing for all airport services.
- Concerns Over Infrastructure Investments: While Auckland Airport is making substantial investments in infrastructure, airlines have raised concerns about the scale, phasing, cost allocation, and overall affordability of these projects. Some of these concerns could have been mitigated if better planning and management of past investments had occurred.
“Aviation is a vital sector for New Zealand’s economy, contributing 5.6% of the country’s GDP and supporting 177,000 jobs. The provision of demand-driven, functional, and cost-effective infrastructure is essential for the continued growth of New Zealand’s aviation sector. The current consultation process with Auckland Airport is ineffective and risks failing to deliver outcomes that are truly in the best interests of passengers. This must change,” Dr. Xie concluded.
IATA’s call for reform underscores the need for a more robust regulatory framework to ensure that airports operate efficiently, fairly, and in alignment with the best interests of consumers and the broader economy.
