Inquiry exposes tensions between airports and airlines

The Productivity Commission inquiry into the economic regulation of airports has exposed tensions between airlines and airports.

The AAA says the present light-handed regime is working well.

The Productivity Commission inquiry into the economic regulation of airports has exposed considerable tension between airlines and airports in Australia.

Almost 50 submissions have been lodged, some running to more than 100 pages.

While airlines say airports are exploiting their monopoly status by price-gouging, airports claim airlines are the real powerbrokers and are “overstating” the impact of their fees on airfares.

With billions of dollars in capital improvements to back them up, the monitored airports of Sydney, Melbourne, Brisbane and Perth have some credibility.

But as anyone who has used an airport would know, large terminals can mean high costs — for parking, taxis, food, drinks, retail items and trolleys — so it’s not much of a stretch to believe airlines are being ripped off as well.

In its submission to the inquiry this week, Qantas highlighted a couple of incidents as evidence of the need for more regulatory oversight of airports. These included sums of $18,000 and $64,000 charged by Canberra Airport in landing fees for Qantas aircraft forced to divert to the terminal because of bad weather.

The national carrier also called out Townsville Airport, with which it has been involved in protracted commercial negotiations, for positioning seats in such a way as to inconvenience passengers heading to the Qantas lounge.

Along with Virgin Australia, Air New Zealand and Regional Express, Qantas wants “faster and fairer access to independent arbitration to resolve disputes”.

It says this will encourage and incentivise airports to behave competitively during commercial negotiations to deliver lower ­prices and greater efficiencies, leading to innovations for passengers and users.

The Australian Airports Association, representing more than 300 airports and aerodromes, believes the present light-handed regime is working well and questions the need for change.

The AAA says since 2002, members have invested more than $15 billion in infrastructure, of which about $10bn has been in aeronautical assets.

“These investments have been necessary to improve safety, sec­urity and amenity for passengers, as well as provide the necessary capacity to allow total airport passenger throughput to grow from 76 million in 2002 to 159 million in 2017,” the AAA ­submission says.

In the airports’ court is the Airports International Council and the Australian Airports Investors Group, both of which believe changes to the present system would inhibit airports’ ability to invest in infrastructure.

The airlines have the Inter­national Air Transport Association onside in their calls for a more effective monitoring system. Other groups, including the Tourism and Transport Forum, the Australian Chamber of ­Commerce and the Business Council of Australia, are more concerned with easing constraints on the nation’s major gateway of Sydney Airport, particularly flight movements and night-time operations.

TTF’s submission says the curfew restrictions in Sydney have failed to take into account the growth in quieter aircraft.

The federal Department of Infrastructure, Regional Development and Cities says its preliminary view is that the case for changing the current “light-handed” approach has not yet emerged, but it will await the outcome of the inquiry before forming a final view.

Either way, the inquiry is shaping up to be one of the most significant for the aviation industry since the privatisation of airports in the 1990s.