Sunday, July 25, 2010

Queenstown Airport: Air New Zealand's Crocodile Tears

The outburst of hot air from Air New Zealand Ltd [AIR.NZ] domestic airline general manager Bruce Parton over the weekend about the deal Auckland International Airport Ltd [AIA.NZ] stitched up over buying a piece of Queenstown Airport seems to be nothing more than sour grapes from a company that practices the same sort of monopolistic, anti-competitive business that the airline is accusing the airport of practicing - one of the reasons I bought AIA shares by the way.

"AIAL has displayed significant greed over several years and is adept at fleecing travellers. It would be naive to think it's not aiming to increase airline and airport charges, which will ultimately increase the cost of travel into and out of Queenstown," NZ Herald, 24 July 2010

Mr Parton's part of the airline has had a decades long history of over-charging on most of the domestic routes that it operates on and still does when not faced with competition in small towns - Napier is still a route that you have to take a mortgage out just to fly there and I am sure you have your own story to tell about your own local Air New Zealand rort.

Lets forget about that though. This is simply part of business. When you don't have a competitor to keep you honest there is always the temptation to charge more. In Auckland Airport's case they are able to charge more because of their size and dominance in this part of the world and that is unlikely to be challenged anytime soon simply because they are the biggest and will probably remain the biggest for many more years to come.

Mr Parton's suggestion that the deal between AIA and Queenstown Airport needs to be looked at by the Commerce Commission is a retrograde move by a manager without the foresight to make the move on Queenstown before AIA did. Is it really going to be a fair playing field if one or more of the airlines flying to Queenstown own the means to fly there and the Airport as well? I dont think so.

Whatever you think of Auckland Airport's business practices and charges - and some of them have been and still are highly suspect and overpriced - Air New Zealand operates in a similar manner and will continue to do so given the opportunity to own part of Queenstown Airport.

Better that a company with experience at running an airport, rather than a state run bureaucracy like Air New Zealand have a chance to fleece us all over again.

Mr Parton's cries are those of a hungry, anti-competive, monopolistic crocodile.

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Auckland International Airport @ Share Investor

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c Share Investor 2010

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