Auckland Airport expected earnings just within regulator’s tolerance

Auckland International Airport, the country’s main gateway, isn’t extracting excessive profits as its expected earnings fall just within the regulator’s tolerance.

The Commerce Commission found information disclosure regulations have had a positive influence on the airport’s behaviour and have been effective in limiting its ability to extract excessive profits, deputy chair Sue Begg said in a statement. The antitrust regulator completed its final report on the transport hub, and found Auckland Airport’s targeted return of 8 percent per annum between 2013 and 2017 was within the commission’s acceptable band of between 71 percent and 8 percent.

“Auckland Airport has made a number of positive changes to its price setting approach during the short time information disclosure has been in place,” Begg said. “Auckland Airport has also improved the way it sets prices to collect revenue for different services and from different consumers.”

The regulator is required to report to the ministers of transport and commerce as soon as possible after an airport, as a regulated monopoly, sets new prices, though it isn’t tasked with making any recommendations on whether regulation should be imposed on an airport.

The commission was unable to conclude whether the information disclosure regime was effective in improving the airport’s operational expenditure efficiency, aiding efficient investment, or sharing the benefit of efficiency gains.

Auckland Airport said it is reviewing the report and will make a response later today.

The shares rose 0.5 percent to $3.095 in trading yesterday, and have gained 16 percent this year.

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