A SHIFT TOWARDS REGULATION? - THE CASE OF NEW ZEALAND

TRL was retained by Air New Zealand to assist its preparations for an enquiry on price regulation at New Zealand's airports on the basis of its comparative work on aeronautical charges. The New Zealand Government took control of the airline in September 2001 and widened the remit of the research to include the effects on competition, to assess whether price regulation is necessary or desirable in the interests of acquirers of airfield activities and to report on whether the market conditions were suitable for the recommendation of price regulation. General issues relating to airport charging are discussed in relation to advice from the International Civil Aviation Organisation. It is suggested that this advice has not been updated sufficiently thoroughly. The Airports Council International produces its own guidance to airport operators on the setting of airport charges which should cover all the costs of the operation including a reasonable rate of return (which it does not define). The International Airline Operators' Association considers that there is a clear need for economic regulation of airports as monopolies and supports airport privatisation. Patterns and trends in the setting of charges, systems of airport price regulation, the UK experience of price regulation, airport price regulation elsewhere in the world, and the Manchester airport case study are described. It is suggested that if a regulatory structure is ultimately considered in respect of Auckland airport it would need to provide a reasonable assurance that it would protect users against excessive pricing while allowing the airport sufficient funds to provide additional capacity to meet future growth in demand. Prices at Auckland airport have historically been high but are sustainable in the absence of direct competition. Charges at Christchurch airport are higher than those at Auckland but again lacks direct competition. Wellington airport has the highest charges but is not as highly developed as the other airports. The Commision's final report recommended price control at Auckland only. Comparative financial performance results are given for Auckland airport indicating that its profits are very high compared with those of Air New Zealand and may have contributed to the economic problems of the airline.

• Corporate Authors:

  TRL

  Crowthorne House, Nine Mile Ride
  Wokingham, Berkshire  United Kingdom  RG40 3GA
• Authors:
  • MACKENZIE-WILLIAMS, P
• Publication Date: 2003

Language

• English

Media Info

• Pagination: 16 p.
• Serial:
  • TRL STAFF PAPER PA/TR/3948/03
  • Publisher: TRL

Subject/Index Terms

• TRT Terms: Airports; Economic factors; Economics; Federal government; Financing; Policy; Profitability; Tariffs; Transportation
• Geographic Terms: New Zealand
• ITRD Terms: 1037: Airport; 237: Economic efficiency; 263: Economics of transport; 244: Financing; 183: Government (national); 8079: New Zealand; 173: Policy; 241: Tariff
• Subject Areas: Economics; Policy; Transportation (General);

Filing Info

• Accession Number: 00941933
• Record Type: Publication
• Source Agency: Transport Research Laboratory
• Files: ITRD
• Created Date: May 8 2003 12:00AM