Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
SUMMARY OF SUBMISSIONS IATA was the only submitter to provide additional information. They forecast travel growth for New Zealand to be between 3.75% and 4.25% p.a. over the next five years. IATA also made the point that while the risk-sharing mechanism has been effective, Airways’ base forecasts should be more realistic, so that price resets are not required. Air NZ considered the forecasts appropriate, and BARNZ did not identify any additional information to consider. AIRWAYS’ RESPONSE Airways has now reviewed the latest published airline schedules for the FY20 year. The schedules show a significant reduction in forecast volume growth when compared to the information available in November 2018. Accordingly Airways has reduced the volume growth forecast for FY20 from 4.0% to 0.7%. In the absence of any additional information Airways has not made any adjustment to the forecast volume growth for FY21 and FY22. Airways note that changes to the volume risk-sharing mechanism in the Pricing Framework provide an opportunity to reset prices within a pricing period. This would occur at the end of FY20 and FY21 if airline schedules indicate that volume growth is more than 2% different from the assumptions used to set prices. Figure 22 shows the revised volume growth forecasts for domestic and international traffic. Figure 23 details the major changes in the FY20 forecast between the proposed pricing and the final pricing.
CONSULTATION PROCESS
EXECUTIVE SUMMARY
PART A AIRLINES
PART B GENERAL AVIATION
APPENDIX 1 PRICING TABLES AND EXAMPLES
APPENDIX 2 SUPPORTING INFORMATION
Figure 22 – Volume growth forecasts for FY20-FY22
FY20 FY21
FY22
Domestic
0.5% 0.8% 0.3%
International
0.9% 1.3% 2.1%
Weighted average growth
0.7% 1.0% 1.0%
Figure 23 - Changes to FY20 volume growth forecast
Proposed FY20 volume growth forecast
4.0%
Deferred delivery of three A320/1 NEOs
(0.9%)
Hong Kong Airlines withdraw from New Zealand
(0.9%)
Reduced international schedules
(1.8%)
Increase to domestic schedules
0.3%
Final FY20 volume growth forecast
0.7%
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