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Speaker 1: Commerce Commission says Auckland Airport's planned charges to airlines over

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Speaker 1: the next five years are too high and could result

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Speaker 1: in excess profits. The airport is set to undergo a

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Speaker 1: multi billion dollar redevelopment, including a combined domestic and international terminal.

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Speaker 1: Auckland Airport was set to increase aeronautical charges to airlines,

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Speaker 1: a cost which would have been passed on to passengers

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Speaker 1: according to those airlines. The executive director of the Board

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Speaker 1: of Airlines Representatives, Catho Brian is with me Kath good morning.

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Speaker 1: They have found that the charges, well the plans for

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Speaker 1: expansion were reasonable, but that the profit was going to

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Speaker 1: be too high.

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Speaker 2: Yeah, that's right. So you know, for the second period running,

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Speaker 2: given that airport's at pricices every five years, Auckland Airport

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Speaker 2: has been found to be targeting excessive profits, which is

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Speaker 2: what the commission, the language like commission uses and they

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Speaker 2: are doing that by setting a target return that is

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Speaker 2: too high. Again the kind of rule set that the

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Speaker 2: Commission requires them to follow, and you know in this

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Speaker 2: case it really is extremely high. So Auckland Airport this

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Speaker 2: time is targeting a return of eight point seventy three

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Speaker 2: percent on aeron recall capex and against the commission midpoint

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Speaker 2: of six point ninety eight. So you know, and those

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Speaker 2: are all numbers, right, but actually what that that kind

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Speaker 2: of looks like is something like two one hundred and

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Speaker 2: twenty six million dollars of excess profits. So not all

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Speaker 2: the profits, just profits that are unreasonable.

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Speaker 1: Quite a lot, quite a lot, quite a lot, right,

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Speaker 1: quite a lot, Keith, what is that? What is that?

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Speaker 1: Because because the original plan they the airline said would

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Speaker 1: have increased fares by forty six dollars for a domestic

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Speaker 1: fare by twenty thirty two, do you think now the

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Speaker 1: airport will just come back and say, all right, we'll

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Speaker 1: adjust our pricing in line with what the ComCom says

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Speaker 1: and everything will be fine.

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Speaker 2: I think that's exactly what they will say, you know.

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Speaker 2: And the last time they set prices and pricesing Event three,

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Speaker 2: they reduced their prices by thirty three million, But then again,

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Speaker 2: at that time the delta was much smaller, so at

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Speaker 2: that time they were targeting a much less high like return,

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Speaker 2: if you like. And this time they've really gone to town.

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Speaker 2: So it was pretty clear that the Commission was going

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Speaker 2: to find that this way, that average return or whack

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Speaker 2: was too high, and so here we are. And so

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Speaker 2: I don't think that deals with the problem of how

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Speaker 2: expensive the capital plan that the airport has is. At

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Speaker 2: six odds billion, do.

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Speaker 1: You think are you saying, do you think they're baking

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Speaker 1: in a bit of fat when they take these plans

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Speaker 1: to the conquer?

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Speaker 2: Well, I guess you know. The rules say that the

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Speaker 2: airport can can set its capex and can set a

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Speaker 2: target return, and the rules say that the airport can

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Speaker 2: set those prices as they wish, and that airlines must pay.

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Speaker 2: And you know, we we don't have any kind of

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Speaker 2: contract or agreement. We just get the bill, and so

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Speaker 2: you can see why we get a little bit wound

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Speaker 2: up about it.

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Speaker 1: Certainly when you're getting an IOU that's got two hundred

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Speaker 1: million dollars potentially in excess profits attached to it, I

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Speaker 1: can see why you would be. Kat, thank you very

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Speaker 1: much for your time. We have to leave it there.

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Speaker 1: Kath O'Brien, who is with us from the Board of

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Speaker 1: Airlines Representatives this morning. For more from News Talks b

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Speaker 1: listen live on air or online, and keep our shows

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