Greg Foran: Air NZ CEO on the Commerce Commission investigation into Auckland Airport's charges

Air New Zealand's Chief Executive claims Auckland Airport's planned high charges for airlines is just a symptom of a larger issue. 

A Commerce Commission draft investigation has found the targeted returns from airlines, are in excess of what's reasonable. 

Air New Zealand warns travellers would bear much of that cost at a time where Consumer NZ finds the airline's fares have soared up to 300% in the last five years. 

Greg Foran told Mike Hosking the investigation is a good start but it's time something changed. 

He says the regulation isn't set at the right level and globally airlines are also finding the same issue. 

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Episode Transcript

Speaker 1 (00:00):
The Comma's Commission have been to the debate for the
second time in a week. Basically, first the Supermarket merger,
of course they're not convinced about that, and now the
Auckland Airport and their charges they're not convinced about that either.
A draft investigation has found the airport's returns were in
excess of what was reasonable. The New Zealand Chief Executive
Greg Forunes with us on this Greg morning. Is this
a win for the airline.

Speaker 2 (00:20):
It's a small part of it, you know, it's dealing
with the return that the airport get on priced aeronautical activities.
So we please to Commerce have come out with that.
We still think this more regulatory change required.

Speaker 1 (00:34):
Will it come.

Speaker 2 (00:36):
We're going to push and continue to push hard on
this and we're going to get on with Andrew Bailey
who's the Commerce Minister, and get him to try and
get some regulatory change in there.

Speaker 1 (00:48):
Do you think Bailey's the government the Commers Commission is
separate from the Commers Commission's point of view. Does this
send the message to Auckland Airport that they're out of
line and Auckland Airport will get that.

Speaker 2 (01:02):
Well. Of course it's the first time the Commerce Commission
have sent this message. Last time we had a price
setting event, there was a fifteen million dollar view that
they were over the top, and this time it's two
hundred million. So you know, this is interesting. But all
what's really doing is saying that in terms of your

(01:23):
aeronautical activities, we think the return you're getting on those
is too much. What we're looking for is for some
activity that says how much you spending to begin with.
And it's not that we don't think some money shouldn't
be spent, No, it's how much is.

Speaker 1 (01:39):
Do you have any sympathy for them in the sense
that the fact that their monopolistic isn't really their fault
and they want to do some stuff another business might
want to do, and good on them for doing it.
But all these people like you, like the Commerce Commission,
like the government, et cetera, are constraining them to a
degree and in normal circumstances that would be seen as unfair.

Speaker 2 (01:58):
Basically I would agree with that Mark. I don't think
this is an issue that Auckland Airport, you know, are
doing anything that a normal business wouldn't do. Our issue
is that the regulations aren't set at the right level
for this. And by the way, it's not any New
Zealand thing where we're seeing other airlines domestic airlines putting

(02:20):
their hands up. It's just that obviously we're the larger player,
so we tend to get more of the voice. But
everyone's feeling it. Auckland Airport are doing what Auckland Airport
would do. It's the regulations here that need to change
and it's Andrew Bailey who can help make it happen.

Speaker 1 (02:35):
While I've got you, tourism mired at eighty percent of
what it once was. Is anybody actually concerned about this
in this country or not? Really?

Speaker 2 (02:45):
I am, and I know my team a and when
you have a look at the numbers, there's one area
in particular that we're all in short and that happens
to be trained. So if we could get the numbers
in China backup, and some of the stats looking at
Mike would indicate that they're down about forty six percent
on where they were twenty nineteen and they were our

(03:08):
second largest tourism market. If we fix that, we actually
go a long way to filling the hole this is.

Speaker 1 (03:16):
But part of the problem with that is that it's
not our fault that China doesn't want to travel and
where they are traveling. I understand they travel domestically and
maybe they're going to Asia like Singapore and Indonesia, et cetera.
Is that our problem? Do we have an image problem
beyond China?

Speaker 2 (03:31):
I would say that, like a lot of problems, there's
a lot of issues that go into them. Possibly China
are trying to fuel their domestic economy, so you know,
are a little bit hesitant to have people leave. What
I would tell you is that traffic between the US
and China, in terms of air travel is still considerably suppressed.
I think I think they're still operating at just sixteen

(03:53):
percent of pre COVID, So people there will want to travel.
We haven't made it as easy as what we could.
You know that these are office is now no longer
open evasion, so that's got to be handhld. Here in
New Zealand, there's a translation fee that has now been
applied to it. So every time you stick friction, it

(04:13):
makes it more difficult for people to do it. What
I'll also tell you is that I think something like
thirty two flights between China and New Zealand every single
week so there's no shortage of capacity there. We've got
to make it really easy for those people to come
here and enjoy a great holiday in New Zealand.

Speaker 1 (04:32):
Well, so I appreciate your time is always great. Forum
in New Zealand CEO.

Speaker 2 (04:35):
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