Air NZ takes aim at airport parking prices
Air New Zealand is arguing that airport parking fees are inflated and unfair and make New Zealand one of the most expensive countries to be an airline passenger in.
Lobbying efforts by the national carrier to push for a Commerce Commission review into airport parking fees have been revealed in a series of emails and documents released under the Official Information Act.
Part 4 of the Commerce Act requires regulation of industries with little or no competition.
But it only requires profits from aeronautical services at airports (such as landing fees and refuelling) to be reported, because alternatives to on-site parking (such as pick-up and drop-off areas, walking, public transport, and taxis) are available.
In 2017, the company made $56.3 million from parking
Last year, Consumer published an article comparing parking fees at different airports and pointing out that in Australia airport parking profits were monitored.
It noted that in New Zealand only Auckland Airport reported its parking profits. In 2017, the company made $56.3 million from parking, up from $52.1m the year before.
The story appears to have grabbed the interest of Air New Zealand, who took the opportunity to push their case with the Ministry of Business, Innovation, and Employment.
The following Monday after the article was released, Air New Zealand’s head of government and industry affairs Duncan Small emailed several managers at MBIE and the Transport Ministry drawing their attention to it.
He pointed out that the money Auckland Airport was earning from parking was rising at the same time as landing fees, making it “among the most expensive airports in the world to be a passenger”.
“[Auckland Airport] justifies themselves by comparing themselves to Australian airports. This is no defence. Australian airports, including Sydney Airport, are among the most expensive in the world.
“They also claim that consumers have other options if they do not wish to park. It is worth noting that taxis, buses and rental car operators are also charged fees by the airport to conduct their business. Parking charges at major NZ airports are generally twice as expensive as parking fees in major CBDs where competition exists.”
Hamish Grant-Fargie, a policy director at MBIE, replied that further work on the issue would be considered as part of a briefing to the new Minister and asked Small for information that would assist.
Small responded that one approach would be to bring both the aeronautical and non-aeronautical costs that passengers faced at airports under one regulation so that money made from activities such as parking offset costs that passengers paid elsewhere at the airport.
Airports, he claimed, had significant market power in relation to parking and could determine the level of competition themselves.
The moral of this story is we should all be airport shareholders ... Auckland Airport used to be the highest market capitalisation business in the country and that’s not because it’s producing lots of stuff, it’s because it's got the best monopoly rights of any business in the country.
“Our experience is that airports have sought to actively remove competitor products from the market including through use of their powers to acquire property rights under the Airports Authorities Act.”
He added that Air New Zealand expected the “well-resourced” airports to challenge attempts at regulation through the courts and amendments to the legislation would be needed to avoid this.
‘We should all be airport shareholders’
Air New Zealand was the only involved party who accepted an interview request.
Small told Newsroom that because airports operated “two tills” (splitting their aeronautical and non-aeronautical costs) and only one was regulated, they could keep ratcheting up costs such as car parking.
“The moral of this story is we should all be airport shareholders. I think A2 Milk is now, but Auckland Airport used to be the highest market capitalisation business in the country and that’s not because it’s producing lots of stuff, it’s because it's got the best monopoly rights of any business in the country.
“Our position is we’re a big customer of the three major airports in terms of our landing fees and their monopolies, and they keep putting their prices up pretty consistently on us. In some cases like Auckland, prices are going up when quality is going down, there’s so much congestion on the tarmac, in the terminal, yet prices keep going up.”
Small dismissed the argument that the various options of travelling to the airport meant there were no competition issues, saying airports strictly controlled who accessed the facility and charged services such as taxis hefty fees.
“We have to see what the new Government’s agenda is in terms of this but we definitely feel like we’re on the side of the angels in terms of advocating for higher service quality and lower cost for travellers.”
In a statement, Auckland Airport spokesperson Lisa Mulitalo said the company met regularly with MBIE and discussed parking “from time to time”.
The range of options customers had to travel to the airport meant the market was working and the current regime was sufficient, she said, adding that parking prices started from “as little as $7 per day or less” if drivers used the Park and Ride services and booked ahead.
Regulation a difficult step
Further documents reveal the Commission is “considering further work” in the area but any appetite for change appears slim.
In a discussion paper, MBIE noted it was possible to view the problem as airports leveraging their market power in the airfield sector into the downstream market to harm its competitors - in this case, ground transport service providers.
“Prima facie, it appears that an airport would have incentives to charge high prices. These incentives would be very similar to the incentives to charge high prices for airfield services. “That is, in principle, it is possible to think of pick-up and drop-off people at the forecourt of the terminal as being equivalent to landing and take-off of planes on the other side of the terminal.”
But it would be difficult to show that prices were not higher than the CBD to manage issues such as congestion, it said.
The Commission, who did not respond to requests for comment, has been reviewing the information disclosure regulation for airports, but this work does not include looking at what services they are required to report on.
If parking were to be looked at the most likely avenue would be a Part 4 review, which the Commission estimated would cost more than $1m and take more than two years.
The issue was, however, deemed worthy of informing the Minister about, with redacted ministerial memos revealing a flurry of meetings with Air New Zealand and airport bosses in quick succession where information about airport parking prices was provided as part of the briefings.