Comment: Public's interest not being met

16:00, Feb 15 2013

Being accused of price gouging by airlines is akin to being accused of ear-biting by Mike Tyson. 

When it comes to devising new ways of separating customers from their cash, airlines have few peers. 

Price fixing, misleading advertising and extortionate credit card charges have all been employed.

Air New Zealand is not the exception to the rule.

It has admitted to false and misleading advertising and the Commerce Commission has just reopened an investigation into credit card handling charges that add up to $17.50 to the price of an international ticket for no apparent good reason.

Nevertheless, airline concerns about Wellington Airport's rapidly escalating landing charges should alarm all Wellingtonians.


So too the concerns of the Commerce Commission which has effectively accused the company - two thirds owned by infrastructure investor Infratil and one third owned by the Wellington City Council - of profiteering.

In a just-released report it calculates that the airport company will extract between $38 million and $69m more over the next five years than can be justified by the need to make a reasonable return on capital. 

The over-charging will hurt not just travellers, but Wellington businesses that depend upon visitors for their custom.

The airport company disputes the commission's findings and says the average landing fee of $11.34 per passenger is small compared with the average ticket price of $350.

However the comparison is fanciful.

It ignores the fact that for an average price of $350 passengers get themselves and their luggage lifted into the sky and transported to distant destinations far more quickly than they could otherwise get there.

What they get for $11.34 is not so clear.

However, anyone who has parked a vehicle at the airport has grounds for suspecting the airport company's motives. There is only one word to describe the $11 it charges motorists for the privilege of parking next to the terminal,  in the wind and rain,  for an hour - extortionate.

The commission's findings highlight the conflict between the airport's interests and those of the public and demonstrate once again the folly of privatising monopolies.

Shareholders, understandably, expect the company to earn as high a return on capital as possible.

Executives would be remiss if they did not seek to take advantage of the fact that Wellingtonians have no choice but to use the airport unless they are prepared to drive north to take an alternative connecting flight.

The only check on the airport's behaviour is that it must not so antagonise the public that the Government is persuaded to impose  price controls.

The public's interest is for travel to and from Wellington to be as cheap and painless as possible.

The more visitors that come, the more flat whites and designer clothing the capital's cafes and boutique stores sell and the more locals they employ.

It is those interests that the council - through its airport shareholding - and the Government should be watching out for. The report provides ample evidence to suggest   both have taken their eyes off the ball. 

The Dominion Post