Airlines have welcomed moves by the Commerce Commission to strengthen how New Zealand’s biggest airports are regulated, following a review that found more could be done to protect consumers from excessive costs.
The Commission’s Targeted Review of Airport Regulation, released this morning, examined the impact of major investment decisions made by regulated airports. It concluded that new measures were needed to ensure long-term benefits for travellers.
Cath O’Brien, Executive Director of the Board of Airline Representatives of New Zealand (BARNZ), said the proposed changes would lead to “better oversight of large investment decisions”.
“Importantly, the changes will help make sure that very large developments proposed by regulated airports are efficient, affordable, and don’t burden New Zealand’s aviation system and its passengers with unreasonable costs,” O’Brien said.
She added that airlines were pleased to see the Commission act quickly to improve regulation and hoped the government would move fast to implement the next steps. “Their report tells New Zealanders there’s more to be done, calling out targeted legislative change. BARNZ members hope the government takes these necessary next steps with urgency.”
Under the changes, Auckland, Wellington, and Christchurch airports — currently subject to Information Disclosure rules — will need to release details of major capital projects earlier in the process. The current system is retrospective, meaning the Commission only examines airport spending after construction has already started.
“This makes sense,” O’Brien said. “Early disclosures about very substantial capital plans allow the Commission to make sure these very high-cost plans deliver on what they promise Kiwis. This is very similar to what the Commission already does for other large-scale monopoly investment.”
The review also suggested introducing independent verification of major capital plans, something already applied to other regulated monopolies such as Transpower.
“Airlines would be pleased to see an independent review of substantial airport capital plans,” O’Brien said. “When airports are committing airlines to billions of dollars of building cost which will play out over many years, having an independent review is essential. We need to be very sure that investments planned by airports deliver the economic growth they are promising, and the right infrastructure, efficiently, without impacting demand for air travel.”
The Commission also noted the lack of a dispute resolution process in the current system. The preferred model, according to the review, would be a “negotiate-arbitrate” approach — something technically available under the Commerce Act but difficult to apply in practice.
Both the Commission and the Ministry of Business, Innovation and Employment (MBIE) have found that the inquiry process in the Commerce Act is overly complex and slow. O’Brien said legislative change was essential to make the regulation more effective.
“The inquiry process that exists in the Commerce Act is so complex that it is unable to be used. Running an inquiry under current legislation is likely to take years and be subject to legal appeal,” she said.
“If further regulation as described in the Commission’s report is needed, the Commerce Act cannot respond efficiently. Without change, suggestion of further airport regulation is an empty threat. We urge the Minister of Commerce, Hon. Scott Simpson, to make sure airport regulation is both efficient and effective.”
