Airlines welcome improved regulation of major airport capital costs
06 October 2025 - BARNZ member airlines welcome the Commerce Commission’s Targeted Review of Airport Regulation published this morning. The report, which examines the impact of major investment decisions made by regulated airports, finds that there is more that could be done to ensure benefits to consumers are delivered over the long term.
BARNZ welcomes the changes to regulation announced by the Commission.“These changes will help provide better oversight of large investment decisions,” says Cath O’Brien executive Director of BARNZ.“Importantly, the changes will help make sure that very large developments proposed by regulated airports are efficient, affordable, and don’t burden New Zealand’s aviation system and its passengers with unreasonable costs.”
It's great to see the Commerce Commission has committed to taking immediate action to improve regulation. Their report tells New Zealanders there’s more to be done, calling out targeted legislative change. BARNZ members hope the government takes these necessary next steps with urgency.
Changes to regulation for airports
The Commission has announced it will make changes to Information Disclosure – the regulation applied to Auckland, Wellington and Christchurch airports. At present, this regulation is backward looking and focuses only on the capital committed for a single pricing period, without considering the full impact of forward-looking investment plans. This means the Commission only makes findings after major capital costs are announced and building is already underway – regardless of whether airlines support investment and regardless of whether the cost of that investment might impact growth.
The Commission will now make changes so airports make earlier disclosures about major capital plans.“This makes sense,” says O’Brien. “Early disclosures about very substantial capital plans allow the Commission to make sure these very high cost plans deliver on what they promise Kiwis. This is very similar to what the Commission already does for other large scale monopoly investment.”
With information disclosures for substantial capital cost provided ahead of final commitment, the Commission would be well placed to suggest balancing solutions such as tilted annuity depreciation, as noted in today’s report.
Proposals for independent verification of substantial capital plans make sense
The Commission has suggested it could require an independent verifier’s report as part of its assessment of capital plans. This is something which applies to other monopoly regulation such as Transpower. “Airlines would be pleased to see an independent review of substantial airport capital plans,” O’Brien. “When airports are committing airlines to billions of dollars of building cost which will play out over many years, having an independent review is essential. We need to be very sure that investments planned by airports deliver the economic growth they are promising, and the right infrastructure, efficiently, without impacting demand for air travel.”
The Commission also observe that there is no process for dispute resolution under current settings. The best solution for this problem is found in negotiate arbitrate regulation – available under the Commerce Act but not easily enacted.
Legislative change is needed
The Commission’s Targeted Review also notes the need for legislative changes to the Commerce Act, to allow further regulation of just one airport or issue, and to allow for an efficient inquiry process. These findings mirror those of MBIE in their recent report into Effective Regulation of Airport Services. BARNZ calls on the Minister of Commerce to ensure changes are made to the Commerce Act so that regulation can be effective.
"Both MBIE and the Commerce Commission have found the same problem,” says O’Brien. “The Inquiry process that exists in the Commerce Act is so complex that it is unable to be used. Running an inquiry under current legislation is likely to take years and be subject to legal appeal."
If further regulation as described in the Commission’s report is needed, the Commerce Act cannot respond efficiently, says O’Brien.
“As BARNZ submitted to the Commerce Act Review, and also to MBIE’s Review – the legislation needs to change to be effective. Without change, suggestion of further airport regulation is an empty threat. We urge the Minister of Commerce Hon. Scott Simpson to make sure airport regulation is both efficient and effective.”
For more information, please contact:
Cath O’Brien, Executive Director, Board of Airline Representatives New Zealand (BARNZ).
