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Wellington Airport earnings 'excessive'

Published: 9:10AM Friday November 02, 2012 Source: Fairfax

Wellington Airport could face tighter regulation after a report by the Commerce Commission found the current regime is allowing it to ''extract excessive profits''.

In a report released ahead of the stock exchange opening this morning, the commission found that while the light touch regime is working well in some areas, the airport was able to charge airlines too much for its services.

"Wellington Airport's target of a 9.5% return is excessive,'' Commerce Commission Deputy Chair Sue Begg said.

''We think a reasonable return is in the range of 7% to 8%.''

Wellington Airport is jointly owned by the Wellington City Council and infrastructure investor Infratil.

Begg said the current regulatory regime, which forced the airport to disclose how it charged customers had added greater transparency.

The commission has no power to regulate the airport's prices, however the latest report could influence whether the government decides to give it greater force.

Last month it announced proposals which if adopted would force utility company Vector to slash its charges for gas pipeline services.

The report on Wellington Airport is the first of three reports the commission is conducting on the sector, with reports on Christchurch and Auckland to follow.