Competition law affects airport ideas

A light aircraft lands at Wanaka airport. PHOTO: STEPHEN JAQUIERY
A light aircraft lands at Wanaka airport. PHOTO: STEPHEN JAQUIERY
Asked to suggest how the Queenstown Airport Corporation (QAC) could solve its growing capacity problem, the groups opposed to the commercial development of Wanaka Airport were of one mind — that Queenstown Airport should share its air traffic with existing airports such as Christchurch, Dunedin and Invercargill. However, that presents at least one obstacle: the Commerce Act. Mark Price reports.

 

The word "cartel" is most often heard in conjunction with South American drug outfits — Sinaloa being the best known.

However, the term does not relate to drugs specifically; it can denote anti-competitive behaviour of any sort.

So, for example, a group of New Zealand airport companies that worked together to reduce competition and maintain high prices would be a cartel.

And that would be an offence in New Zealand under the Commerce (Criminalisation of Cartels) Amendment Act 2019.

Queenstown, Dunedin and Invercargill Airports co-operate on some operational matters but, aware of the law, avoid anti-competitive behaviour.

Queenstown Airport Corporation chief executive Colin Keel has stated the company "supports the dispersal of air services capacity across the lower South Island" but has also made it clear such dispersal is a matter for the airlines, not the airports.

"This approach is consistent with the requirements of the Commerce Act," he said last year.

So, that would seem to be an end of the matter — the airports abiding by the law and maintaining their commercial distance.

But there is an avenue the owners of the three airports could explore if they wished to share Queenstown Airport’s air traffic with other airports.

It is the provision in the Commerce Act allowing the Commerce Commission to "authorise anti-competitive agreements ... where the public benefits outweigh the competitive harms".

What case the airports would have would need to be contemplated by their lawyers.

It is, however, something that could well be under investigation already.

Queenstown Airport’s air traffic being shared with Invercargill Airport would satisfy those...
Queenstown Airport’s air traffic being shared with Invercargill Airport would satisfy those opposed to development of Wanaka Airport for jet traffic.PHOTO: GETTY IMAGES

Consultants MartinJenkins were employed by the Queenstown Lakes District Council to investigate the social and economic effects of airport development in the region.

One of the instructions the council gave MartinJenkins was to investigate the scenario of the "distribution to alternative existing airports,

i.e. Christchurch, Dunedin and Invercargill, with little or no growth at Queenstown or Wanaka Airports".

That suggests MartinJenkins will be looking closely at the Commerce Act and whether an agreement between the airports might be sanctioned by the Commerce Commission, if an application was made.

The Commerce Commission, when asked for an example of a case where it had previously authorised a legal "anti-competitive agreement", came up with decision "[2017] NZCC 6".

The commission’s determination in that case allowed the Nelson City Council and the Tasman District Council to create a regional landfill business unit "that would make joint governance, management and operational decisions for the councils’ two landfills".

The commission, headed by Dr Mark Berry, considered the arrangement would "result, or be likely to result, in a benefit to the public which would outweigh the lessening in competition that would result, or would be likely to result, from the arrangement".

Dr Berry said the proposal would remove the existing competition between the two landfills but by imposing conditions the commission was "satisfied that any reduction in competition is likely to be outweighed by the public benefits".

While it is not possible to predict whether a similar arrangement would be approved for southern airports, those opposed to development at Wanaka believe it is the best way forward.

The Otago Daily Times asked each of them the question: What do you believe the solution is to the undeniable pressure Queenstown Airport is facing?

- Wanaka Stakeholders Group chairman Michael Ross: "In the interest of our environment and the clear threats from both climate change and over tourism, we need to respect the capacity limits at [Queenstown Airport] and start actively sharing the benefit proactively with Dunedin and Invercargill."

- Lake Hawea Residents Association (HCA) chairwoman Cherilyn Walthew: "I can’t offer a fully endorsed HCA response at this time however ... it would seem logical for QLDC to enter talks with organisations who have existing and under-utilised resources, such as Invercargill and Dunedin ..."

- Luggate Community Association chairman Graeme Perkins: "My thoughts, but I imagine the Luggate community wouldn’t disagree, ... encourage use of other airports obviously Invercargill and Dunedin."

- Albert Town Community Association past chairman Jim Cowie: "What is required is a national tourist strategy that takes the emphasis and pressure off Queenstown and encourages, even redistributes, tourist numbers more evenly throughout the country."

Queenstown Lakes Mayor Jim Boult said he was "not in any way" qualified to comment on the provisions of the Commerce Act.

He reaffirmed his view that "part of the answer" to Queenstown Airport’s capacity issues "lies in closer co-operation with other airports — Christchurch because we do not want another long haul port in the South Island, Dunedin to an extent, and Invercargill, particularly, given it is two hours’ drive from Queenstown.

" However, it is as I say, only part of the answer.

"One of the major attractions for the tourism industry in Queenstown as a destination is the closeness of the airport to the town.

"It is also a major plus for locals who often comment to me on this.

"The reintroduction of commercial flights into Wanaka is to provide for the circa 400,000 Upper Clutha locals who use Queenstown now."

The result of MartinJenkins’ studies are due to be made known to the council this month.

mark.price@odt.co.nz

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