Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
Milford services AIRWAYS PROPOSED
CONSULTATION PROCESS
Airways provides an Aerodrome Flight Information Service (AFIS) to operators at Milford. To ensure Milford remains cost-effective, Airways’ approach is to minimise investment as much as possible while ensuring safe services at a fit-for-purpose service level. Airways proposed a price path to fully recover the costs of labour, maintenance, and the depreciation and capital charge associated with a $0.5m investment in new staff accommodation. SUMMARY OF SUBMISSIONS Aviation NZ felt that the capital cost of the new accommodation should not be included in Milford pricing because Airways will likely make a capital gain on the property when this is sold. They also sought more advice on the cost recovery model – noting their view that any changes should be spread evenly over the three years. Aviation NZ also noted that Airways’ volume forecasts don’t reflect the changes the Department of Conservation (DoC) intends making. AIRWAYS’ RESPONSE Airways’ Economic Value Added (EVA) model separates operating activities from non-operating activities in order to provide a more relevant measure of sustainable economic performance. Any capital gain (or loss) from the sale of assets is removed from Airways’ pricing calculations in accordance with this framework. Aviation NZ’s submission that changes should be spread over the three years would be inconsistent with the Pricing Framework. In effect it would involve moving the cost recovery of the new accommodation forward, into a year when it would not be in use. The decrease in prices in FY20 reflects the significant volume growth over the 2016 -2019 pricing period. In response to Aviation NZ’s submission and feedback received from Milford users at the public meeting, Airways has met with DoC and is comfortable that the current traffic volumes will continue. Airways continues to investigate the operational performance and cost-effectiveness of alternative service provision models, including providing the service remotely using digital technologies. The only changes to the proposed prices for Milford are those being driven by changes to inflation rates and the cost of capital. Airways’ costs at Milford are summarised in figure 29 and the price changes are outlined in figure 30.
EXECUTIVE SUMMARY
PART A AIRLINES
PART B GENERAL AVIATION
APPENDIX 1 PRICING TABLES AND EXAMPLES
APPENDIX 2 SUPPORTING INFORMATION
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