ICCC issues final report into Papua New Guinea’s aviation sector

By Andrew Curran.

Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) has released its final report following its inquiry into the country’s aviation industry.

The report contains two key recommendations, including subjecting the National Airports Corporation (NAC) and NiuSky Pacific Limited to economic regulation regarding pricing and service quality, and establishing a high-level airport investment steering committee to coordinate major airport investment decisions.

“There would be significant benefits emerging from the recommendations in terms of greater accountability, service efficiency, and transparency in the provision of aviation services in PNG,” said ICCC CEO Roy Daggy.

The Papua New Guinea Government initiated the inquiry last year following ongoing complaints about expensive airfares, delayed and cancelled flights, and dilapidated airports.

The ICCC said it received evidence about maintenance issues, underused airports, confusing charges, and airport projects that did not match airline requirements.

“The current aviation law… does not focus on stopping monopoly prices, protecting passengers from unfair fees, or making sure service quality is good,” the final report states.

ICCC calls for regulation of NAC and NiuSky

The ICCC says the government should bring NAC and NiuSky under independent economic regulation so that their pricing and service quality better reflect the public interest.

NAC owns and operates 22 national airports, although only four currently make a profit. The ICCC says NAC’s pricing is high compared with similar countries and that no independent body currently checks whether the fees charged to airlines and passengers are fair.

NiuSky is the sole provider of air navigation services within Papua New Guinea airspace.

However, the ICCC says there is no independent oversight of NiuSky’s pricing and no clear standards governing the level of service it must provide. Following a series of financial losses, the report says NiuSky increased its fees and is now generating “excessive returns”.

The report recommends giving one of the government’s agencies legal authority to review and approve airport fees charged by NAC and air navigation fees charged by NiuSky, using a transparent methodology based on actual costs.

In addition, the report says NAC and NiuSky should be required to disclose financial information to the regulator and publicise how their fees are set and what service levels are provided in return.

The ICCC also recommends setting pricing over multi-year periods to create greater certainty and predictability for airlines and passengers.

“This responds directly to what stakeholders asked for; keep NAC and NiuSky’s finances separate and well controlled, stop wastage, and make sure users only pay for costs that are efficient and justified,” the report adds.

Steering group proposed for airport investment decisions

The report’s second major recommendation is the creation of a steering group to advise on major airport spending decisions based on input from airlines and other industry stakeholders.

The ICCC says this would help establish clear national priorities around airport investment and ensure major projects and funding plans are reviewed before money is committed.

“The group would test if the project design, timing, and costs make sense, and make sure past problems, such as poor runway upgrades, do not happen again,” the report states.

“By including airlines and other key users, government can avoid white-elephant projects, improve project quality, and reduce long-term costs that later show up in ticket prices.”

To support the proposed reforms, the ICCC says aviation responsibilities should be more clearly defined in the National Aviation Policy and the Civil Aviation Act 2000.

Under the proposal, the Civil Aviation Safety Authority would continue focusing on safety, while an independent economic regulator would oversee pricing, service quality, and consumer protection.

The Ministry of Transport would retain its existing policy and sector oversight responsibilities.

The ICCC has also indicated it is willing to take on the role of aviation economic regulator.

“The ICCC already has the legal mandate, skills, and experience to regulate monopoly prices and protect consumers; therefore, the Government should accord ICCC the role of aviation economic regulator in the short to medium term,” the report says.

Report finds domestic air fares in Papua New Guinea are not excessively high

Despite public perceptions, the report concluded that Papua New Guinea’s domestic airfares are not excessively high by international standards and sit roughly in the middle compared with similar countries.

However, the ICCC says the government should strengthen basic passenger rights and require airlines and airports to clearly disclose all ticket fees and charges. It also recommends introducing a simple complaints process covering ticket conditions and associated fees.

Additionally, the report says competition should be encouraged wherever possible, particularly in aviation fuel supply and ground handling services.

“This can lower costs and improve supply for airlines and, in the end, for passengers,” the report notes.

“These steps will help make sure every kina spent on airports and navigation services gives real value, and that aviation continues to support Papua New Guinea’s growth.”

You can read the final report here.

Photo: AI-Generated.

Contact the writer: andrew@aerosouthpacific.com