Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
AIRWAYS’ RESPONSE Customers have provided mixed views about the requirement for an FCR. Airways notes that this is a project led by AIAL and the decision to implement a FCR rests with them. At the time of preparing this response document the AIAL Board had not made a final decision about whether to the project would proceed. The FCR project is a unique capital project for Airways. Airways agrees with BARNZ that a price adjustment should be made if the project does not proceed. We also note that if the project does not proceed there may still be elements of the proposed capital spend that are still required. Therefore, if the project does not proceed as planned Airways will: 1. Review the scope of any residual capital expenditure and operational costs. 2. Calculate the pricing impact resulting from the reduced scope. 3. Communicate changes to prices by 30 April 2020, at the same time as Airways advises customers of its volume forecast for the next year (as required as part of the volume risk sharing mechanism from the Pricing Framework). 4. Adjust prices from 1 July 2020, and 1 July 2021 if required. Air NZ’s suggestion of other pricing mechanisms may require a change to the Pricing Framework. Further discussion about the Pricing Framework is covered in ‘Submissions on other airline topics’. Figure 8 summarises the costs of the FCR project included in the final pricing. Note the costs are only for Airways’ owned infrastructure. Other stakeholders involved in the implementation of the FCR project will recover their costs through other means.
Figure 8 - Financial summary of the FCR project
$m
FY20 FY21
FY22 Total
32.6
Capital investment
17.4 15.2
–
2.7
Operating costs
0.9 0.9 0.9
14
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