The Commerce Commission's view of Christchurch
International Airport's proposed pricing raises the possibility
of regulatory interference in the sector, Forsyth Barr broker
Andrew Rooney says.
The commission said Christchurch International Airport's
proposed prices over the next two decades were significantly
higher than its view of what was acceptable, and tougher
disclosure requirements had little impact on promoting price
The airport was targeting a return of 8.9% over the next 20
years, well above the commission's view of an acceptable
return of between 6.6% and 7.6%, the regulator said in its
draft report on the hub's information disclosure.
Mr Rooney said his assessment of the regulatory risk in the
airport sector rose slightly following the commission's draft
Christchurch airport had set lower prices in the next five
years which were not considered as targeting excessive
profits, though that appeared to have been driven by the drop
in demand after the region's spate of earthquakes rather than
the rules governing disclosure.
The section 5G review process on each of New Zealand's major
airports had resulted in mixed outcomes.
Wellington was deemed to be generating excessive profits and
had subsequently outlined its intention to reconsult with the
The commission determined Wellington would generate an
internal rate of return of 12.3% for the current pricing
In contrast, Auckland International Airport was not judged to
be earning excessive profits with a 7.9% return, Mr Rooney