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Speaker 1: Play and Bread. Commerce Commission found that Auckland Airport has

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Speaker 1: been overcharging airlines since twenty twenty three. The airport lowered

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Speaker 1: their upcoming price increases after being found to have overcharged

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Speaker 1: by one hundred and ninety million dollars. Barnes executive direct

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Speaker 1: to Katho Brian's with us now, kath good evening.

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Speaker 2: Good evening, Ryan.

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Speaker 1: How is it possible to overcharge by that amount without

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Speaker 1: realizing what you're doing?

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Speaker 2: Well? The wonderful thing in New Zealand is that airports

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Speaker 2: can set prices as they see fit, which means that

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Speaker 2: they can set their target return kind of as they wish,

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Speaker 2: and they do that, and then a couple of years

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Speaker 2: later the Commerce Commission comes along and has a little

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Speaker 2: look at that and in this case has found that

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Speaker 2: it's a little bit excess. So Auckland Airport has very

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Speaker 2: slightly lowered those prices or that all that target return,

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Speaker 2: which has an effective lowering the prices, and then they

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Speaker 2: will gaily carry on increasing prices to cover the infrastructure happily.

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Speaker 1: Ever after, how does this impact airlines? How is it

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Speaker 1: impacting airlines?

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Speaker 3: Oh?

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Speaker 2: Look, you know the age old problem of Auckland Airport.

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Speaker 2: You know this, this monopoly of monopoly airports that is

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Speaker 2: seventy five percent or thereabouts of the traffic into New Zealand,

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Speaker 2: you know, is building a substantial you know, airport building.

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Speaker 2: It essentially a new airport to replace the old one.

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Speaker 2: And that's costing something like six billion odd dollars which

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Speaker 2: will be recovered all from airlines flying here. And that

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Speaker 2: has the effect of raising prices for airlines all the time.

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Speaker 2: And this report today is just about the target return

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Speaker 2: or the profit margin that Auckland Airport can also recover

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Speaker 2: as well as the cost of the bills. But we

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Speaker 2: still have to pay for the cost of the build.

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Speaker 2: So that's the real challenges that prices will continue to

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Speaker 2: rise for years and years and years.

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Speaker 1: That's your big bug bear, isn't it. It's the build not.

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Speaker 2: Yes, but it really is.

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Speaker 1: But if we will all get a better airport out

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Speaker 1: of it, and if we don't invest now, it'll cost

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Speaker 1: us more tomorrow.

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Speaker 2: Yeah, look totally. And if we we do need to invest,

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Speaker 2: and we do need to improve the airport, but I

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Speaker 2: am not so sure that we need to spend you know,

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Speaker 2: upwards of six billion odd dollars without even getting a

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Speaker 2: second runway, you know, to get to get the job done.

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Speaker 2: And what concerns me more is that the increasing prices

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Speaker 2: may impact demand for destination. New Zealand Auckland Airport is

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Speaker 2: already seeing flat demand for air services and that would

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Speaker 2: be fine if airport's all over the world we're also

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Speaker 2: seeing flat demand.

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Speaker 1: Yeah, but they're not. But they're not typle of recovering

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Speaker 1: quicker than Usah, So have we got like the Ferrari

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Speaker 1: if we're comparing this to the ferries, Have we got

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Speaker 1: a Ferrari version of an airport upgrade when what we

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Speaker 1: need is a Toyota?

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Speaker 3: Is that what you're saying, Well, certainly, we've got a

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Speaker 3: very expensive airport upgrade that includes a wonderful road that

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Speaker 3: goes all the way to a shopping mall, and eventually

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Speaker 3: we'll have to include a bridge to join from the south,

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Speaker 3: you know, replacing that connection because of the traffic to

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Speaker 3: the shopping walls.

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Speaker 2: And we've got an extensive property portfolio that surrounds the airport.

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Speaker 2: None of them come from which actually has to go

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Speaker 2: into the airport are building. All of that is recovered

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Speaker 2: from prices. So we have this regulatory setup which is

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Speaker 2: actually doing new Zealand as a disservice. And one of

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Speaker 2: the great things about this Commerce Commission report that's come

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Speaker 2: out today is that it actually canvases the sorts of things,

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Speaker 2: sorts of other regulation that policymakers could apply if they

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Speaker 2: so chose, and if there was to be an investigation,

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Speaker 2: these are the sorts of things that we would consider.

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Speaker 2: And so I think, you know, really that places the

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Speaker 2: ball firmly in Minister Simpson's court, the Minister of Commerce,

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Speaker 2: to see whether he will make a move.

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Speaker 1: Interesting, well, they've certainly got a n apptite for making

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Speaker 1: moves at the moment.

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Speaker 2: It might be that.

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Speaker 1: You've timed it right, Kath. Thank you very much for

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Speaker 1: your time. Appreciate it. Kath O'Brien, executive director of Barnes.

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