IATA urges urgent reform of New Zealand’s airport regulatory framework following Auckland Airport pricing review

Credit: IATA

The International Air Transport Association (IATA) has called for urgent changes to New Zealand’s Economic Regulatory Framework for Airports, following the Commerce Commission’s review of Auckland Airport’s (AKL) Price Setting Event 4. Dr Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia Pacific (ad interim), stated that it is unsurprising the Commission found AKL’s charges excessive, ranging from NZD150 million to NZD226 million. Although the airport has reduced charges for the next two years, IATA warns that the current regulatory framework is not fit-for-purpose and needs immediate reform.

Details on IATA’s concerns around New Zealand’s airport regulatory framework

IATA raised several concerns about the framework, including the current “light-touch” regulation, which allows AKL to set its aeronautical pricing as it wishes. As the sole monopoly provider, the airport can manipulate the regulatory process by setting high initial prices and then lowering them after the regulator’s review or ignoring the findings altogether. Non-aeronautical activities, which generate higher returns, are also excluded from the Commerce Commission’s oversight.

Although AKL is investing in infrastructure, airlines have expressed concerns about the scale, timing, cost allocation, and affordability of these investments. Some costs might have been avoidable with better infrastructure planning.

“Aviation is a key economic sector for New Zealand, supporting 5.6% of the country’s GDP and 177,000 jobs. The delivery of demand-driven, functional, and cost-effective infrastructure is vital for the continued growth of the aviation sector. The current consultation process with AKL is ineffective and may not lead to outcomes in passengers’ best interests. This must change,” said Dr Xie.

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