Christchurch Airport Excessive Profits Criticized by Commerce Commission (Essay Sample)
The task was to write an essay about the effects of increase in Airport charges by the management of ChristChurch airport. This sample displays why it wouldn\'t be prudent for the airport management to increase airport fee for it t achieve its intended profit projection.source..
Christchurch Airport ‘Excessive’ Profits Criticized by Commerce Commission
Christchurch international Airport’s profits that is targeting for the two decades have been criticized. They are said to be extreme through the commerce commission. Profits to be earned by the airport that are proposed in the subsequent 20 years aim a yearly return of 8.9 percent. That figure is said to be a bit higher than its perspective of an acceptable return between 6.6% and 7.6% (New Zealand Gerald).
According to the commission, Christchurch Airport has resolved to set prices that are relatively low in the subsequent five years to be safe of price surprises to consumers. It said that the decrease in demand after the Christchurch earthquakes had been the determining factor in this decision, instead of information disclosure. This decision implies that this company is not aiming extreme profits in the first five years (New Zealand Gerald).
According to the manager of the Board of Airline representative NZ, the report of the commission indicates that a powerful form of price control is required in New Zealand. He said that the current regime is too light headed and lets the airports at liberty to levy whatever prices it wants. This report in Christchurch airport shows that airports have to be under a firmer type of supervision than only information disclosure (New Zealand Gerald).
The firm’s decision on how much to produce and the price to charge its customers depends on the market structure of the firm. The airline industry belongs to oligopoly market structure. In this, f...
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