Airlines group decries ‘price gouging’ at airports

An industry group of Australia and NZ’s commercial airlines is taking on airports to try to drive down charges.

A4ANZ wants the ACCC to intervene in negotiations between airport users and airports . Picture: Greg Higgs

A powerful aviation industry group made up of Australia and New Zealand’s biggest commercial airlines is taking on airports to try to drive down charges on everything from aircraft parking to car rental.

Airlines for Australia & New Zealand, headed by former Australian Competition & Consumer Commission chair Graeme Samuels, is proposing tougher oversight of airport “monopolies” to stop what they consider to be price gouging.

Mr Samuels said one of the worst examples was “airport concession recovery fees”, which were imposed on car rental companies, of up to 28.5 per cent on top of the cost of car hire.

The charges were passed directly on to consumers, making it much more expensive to hire a car from an airport depot, generally the most convenient drop-off and pick-up site.

While the charges varied from airport to airport, and between car hire companies, they were highest at Sydney Airport, followed by Canberra, Melbourne, Brisbane and Perth Airports.

Four of those airports, including Sydney, Melbourne, Perth and Brisbane, are in the top six airports in the world for the biggest profit margins.

Mr Samuels said the car rental companies were not in a good position to negotiate with airports because of their need to operate out of them.

“Why do the rental companies pay it? Because they have no other choice — if they weren’t at the airport they would lose too many customers,” Mr Samuels said.

“The monopolists have them over a barrel.”

Australian Airports Association chief executive Caroline Wilkie said the airport concession recovery fees were not imposed by airports.

“These are locational fees charged by car rental operators ... and may include elements not related to operators’ agreements with airports,” Ms Wilkie said.

“Airports provide infrastructure and facilities for car rental operators to conduct their business close to terminals, providing choice and convenience for passengers.”

She said the airport land provided for car rental services often represented lost revenue.

“Airports forgo car parking revenue to facilitate these services as part of their commitment to providing a wide range of transport options for passengers,” Ms Wilkie said.

“Car rental operators benefit from increased demand as a result of their easy access to terminals, which allows them to offer the best possible deals to consumers.

“This allows customers to choose the best deal for them from a range of on and off airport operators.”

Mr Samuels said other charges were also in the sights of Airlines for Australia & New Zealand members, including Qantas, Virgin Australia, Rex and Air New Zealand.

“As far as we’re concerned, our passengers are incurring costs that shouldn’t have to be incurred,” said Mr Samuels.

“We’re saying ‘look, this has got to stop’.”

Those charges included taxi surcharges for accessing airport land, rental premiums for retailers driving up the cost of airport food and other goods, and aeronautical charges for airlines in return for airport services such as parking, baggage and handling.

Mr Samuels said it was clear the current role of the ACCC as a monitoring body for airports was ineffective.

He said A4ANZ would prefer to see the ACCC have the ability to intervene in negotiations between airport users and airports. “There ought to be the threat of the ACCC intervening at the request of at least one of the parties to arbitrate, and to come to a reasonable conclusion,” Mr Samuels said.

“We’ve added a further rung to that and applied what’s called last offer arbitration to make negotiations less one-sided.”

Last offer arbitration would give the ACCC the final say on deals struck by airports with various stakeholders.

The proposal will be put in a submission by A4ANZ to the Productivity Commission inquiry into the economic regulation of airports.

Barry Adams, executive director of the Board of Airline Representatives Australia, shared the concerns of A4ANZ with regard to “the Australian government’s current light- handed economic regulatory arrangements”.

“BARA considers that light-handed economic regulation has not delivered the high-quality airport service outcomes envisaged for international airlines,” said Mr Abrams.

“Members are operating on a day to day basis with airport services that can fall below their reasonable expectations and below the standards they consider to be commensurate with the charges levied,” Mr Abrams said.

The deadline for submissions to the Productivity Commission inquiry is September 3, 2018.