ACCC calls for more effective regulation of ‘exploitative’ airports

The ACCC has called for the regulation of “exploitative” airports to halt rip-offs due to abuse of market power.

Aerial pictures of Sydney Airport.

Australia’s competition watchdog has called for effective regulation of the major airports to stop them exploiting their market power to the detriment of consumers.

The Australian Competition and Consumer Commission has today published its submission to the Productivity Commission inquiry into the economic regulation of airports.

ACCC chair Rod Sims said the current light-handed regime was not effective in constraining behaviour because there was no credible threat of regulation.

Mr Sims said the main example of that was high aeronautical charges imposed by airports on airlines.

Over the last decade revenue per passenger had increased in real terms by 59 per cent at Perth Airport, 36 per cent at Brisbane, 31 per cent at Melbourne and 15 per cent at Sydney Airport.

Despite the more subdued rate of increase in Sydney, the ACCC submission said the country’s biggest airport still maintained the highest revenue per passenger of the four airports.

“The increases across the four airports over the past decade represent an additional $1.3 billion in payments from airlines,” the submission said.

“Despite these significant increases in charges, only Perth Airport has materially improved its overall quality of service.

“The ratings for the other airports have changed little over this period, typically ranging from ‘satisfactory’ to ‘good’.”

Mr Sims said a more effective regulatory regime was needed to address high aeronautical charges.

“While commercially negotiated outcomes are preferred, there is an imbalance in bargaining power between monopoly airports and airlines, particularly small airlines,” he said.

“To achieve this, the airlines need better access to information and recourse to commercial arbitration if a commercial deal cannot be struck.”

He also called for the PC to consider whether other major airports, such as Adelaide and Canberra, should be subject to similar types of regulatory oversight as the four monitored airports.

In relation to carparking and landside access costs, Mr Sims said current monitoring arrangements should continue.

“Unlike for aeronautical services, there does not appear to be an obvious more effective approach to regulating car parking and landside access services,” he said.

“Further, monitoring and advising consumers may be more effective in relation to car parking than aeronautical services because there are some other ground transport options available.”

The Australian Airports Association wants an end to the monitoring of airport carpark costs because of the regulatory burden to members.

The AAA’s submission to the PC inquiry also argued the current light-handed monitoring regime was working well as demonstrated by the considerable investment airports had made to facilities.