Airways Corporation of New Zealand Limited Pricing for the 2019-2022 Period
Executive Summary
To ensure safe skies today and tomorrow, Airways needs to create the aviation environment of the future. Airways will work with partners to provide our customers with safe, integrated airspace management through expert knowledge and technology enabled solutions. We are focused on providing air traffic management services that enable aircraft to navigate safely and efficiently across New Zealand. This document provides the final set of prices that will apply to airlines and General Aviation (GA) from 1 July 2019. It also provides Airways’ response to submissions received about prices for the three-year period from 1 July 2019 to 30 June 2022. Airline prices In January 2019 Airways commenced consultation for the 2019-2022 pricing period. Airways proposed a revenue increase of $54.1m to ensure the continued safety and resilience of the aviation network, while anticipating and planning for the new realities of air traffic management. After applying volume growth, this resulted in a price increase of 18.9% for airline customers. Airways carefully considered all submissions on airline prices before determining the final prices included in this document. As a result, Airways has reduced the overall revenue increase by $1.8m to $52.3m for the 2019-2022 pricing period. In determining final prices, Airways has also reviewed the forecast of volume growth based on the latest available schedule and fleet information. Since publication of our consultation document there has been a significant reduction in the expected volume growth in the first year of the pricing period from 4.0% to 0.7%. When the overall annual revenue change and revised volume growth are applied the total airline price change has increased to 21.4%. The drivers of the revenue and price increase are shown in figure 2 with a summary of the drivers and Airways’ consideration of submissions provided on the following pages.
Figure 2 – Revenue and price increase drivers $ Revenue change
% change
FY20 FY21
FY22 Total
FY20 FY21
FY22 Total 1
15.6
8.2%
1. Enhanced services
6.5
4.7
4.4
3.5% 2.0% 1.8%
2. Business transformation (including ATM platform)
12.9
6.8%
9.0 5.6 (1.7)
4.7% 2.5% (0.7%)
3. Capital to maintain current services
4.7
2.5%
2.9
0.1
1.7
1.5% 0.0% 0.8%
19.1
10.0%
4. Changes to operating costs (including inflation)
12.8
1.1
5.2
6.7% 0.7% 2.2%
Total increase
31.2 11.5 9.6 52.3 16.4% 5.2% 4.1% 27.5%
5. Volume growth
3.0%
Opening volume adjustment
3.0%
3.1%
Annual volume growth
0.7% 1.0% 1.0%
Total price change
12.7% 4.2% 3.1% 21.4%
1. Total % column includes the compounding effect of the changes.
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