Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
5. Volume growth Once total required revenue is determined in Part A, Sections 1 – 4, forecast volumes are used to set prices. Volume growth comprises an opening volume adjustment to account for variances from the 2016–2019 period and forecast annual volume growth. Figure 21 summarises the final volume growth assumptions, with an explanation and responses to submissions provided in sections 5.A. and 5.B.
Figure 21 – Components of volume growth
$ Revenue change
% change
FY20 FY21
FY22 Total
FY20 FY21
FY22 Total 6
3.0%
A. Opening volume adjustment
3.0% –
–
3.1%
B. Annual volume growth
0.7% 1.0% 1.0%
Total volume growth
3.7% 1.0% 1.0% 6.1%
6. Total % column includes the compounding effect of the changes.
5.A. Opening volume adjustment
AIRWAYS PROPOSED At the start of each pricing period a one-off adjustment is made to reflect any unexpected volume movements in the previous pricing period. Airways proposed an opening volume adjustment of 3.2%. This means that in FY19 Airways expected to collect 3.2% more revenue than the required revenue set during the 2016 Pricing Consultation. Airways proposed to review the volume forecasts based on the most up to date information available at the time of setting final prices.
SUMMARY OF SUBMISSIONS
There were no submissions about the opening volume adjustment.
AIRWAYS’ RESPONSE Airways’ forecast of revenue for FY19 has softened since the proposed prices were calculated. Airways now expects to collect 3.0% more revenue than the required revenue set during the 2016 Pricing Consultation. Airways has updated the opening volume adjustment to reflect the FY19 forecast.
5.B. Annual volume growth
AIRWAYS PROPOSED Airways proposed volume forecast was based on airline schedules available in November 2018 and historical growth rates. Airways committed to reviewing the volume growth forecast in April 2019 to reflect the most current airline schedules and any additional information supplied in submissions.
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