Travellers could face upward pressure on airfares as Australia’s four largest airports embark on a wave of major infrastructure projects, according to the latest Airport Monitoring Report from the ACCC.
The competition watchdog found that aeronautical investment across Brisbane Airport, Melbourne Airport, Perth Airport and Sydney Airport jumped 43.6 per cent in 2024-25, with the quartet collectively spending $1.5 billion on aeronautical facilities.
The surge in spending marks a clear shift from the subdued capital programs seen in the immediate post-pandemic period, as construction ramps up across terminals, runways and access projects.
Collectively, the four gateways have proposed almost $20 billion in major infrastructure over the next decade. Key projects include a new terminal and runway development in Perth, Melbourne’s third runway, Sydney’s proposed integration of its T2 and T3 domestic terminals, and a third terminal in Brisbane.
“Ongoing investment is needed to ensure airports can continue to meet the needs of travellers and airlines, with Sydney, Melbourne, Brisbane and Perth airports collectively handling about 120 million passengers in 2024-25,” ACCC Commissioner Anna Brakey said.
However, she warned the funding task ahead may not be cost-neutral for airlines or passengers.
“Large capital programs are likely to place upward pressure on airport charges paid by airlines, which may result in higher airfares for passengers as these costs are recouped,” she said.
“It is important that airport charges reflect sensible and timely investment decisions, efficient costs and a rate of return that matches the risks involved.”
This growth has supported airport and airline revenue while placing additional stress on terminal capacity, passenger processing systems, security screening and baggage facilities.
Calls for regulatory review
Airport charges remain unregulated, and the ACCC reiterated concerns that the existing monitoring regime does not sufficiently constrain the market power of the major airports.
The watchdog said stronger measures – including binding commercial arbitration to resolve disputes between airports and airlines, and improved financial disclosure – would better address the airports’ bargaining position and potentially limit charge growth that ultimately flows through to ticket prices.
Given the time elapsed since the 2018-19 Productivity Commission inquiry, and the scale of both planned investment and rising aeronautical profits, the ACCC has encouraged the federal government to consider directing a fresh inquiry into whether the current regulatory settings remain fit for purpose.
Airports say capital input is needed to meet demand
But Australian Airports Association (AAA) CEO Simon Westaway said airports are responding with sustained private investment to support long-term connectivity and ensure infrastructure keeps pace with future demand.
“Over the next decade, $33 billion is being invested at Australia’s four largest airports in collaboration with airlines to expand terminals, improve baggage processing, enhance security and screening areas, upgrade runways and deliver better passenger amenities,” Westaway said.
“This investment is privately funded and is essential to ensure airports can continue to support Australia’s aviation needs while maintaining strong service standards.
“Sustained private investment of this scale requires regulatory certainty and commercially viable returns to support long-term infrastructure planning.
“Major airport infrastructure such as runways and terminal expansions can take many years to plan, approve and then construct.
“Many Australians have likely experienced crowding at international terminals in recent years, and we’re working to fix this.
“The ACCC report highlights a profitable sector supported by strong international travel but also indicates that airports are facing rising cost pressures – like the rest of the aviation sector – with expenses up 8.1 per cent last financial year.”
Airports are major contributors to national productivity, generating more than $105 billion in value added to the Australian economy each year and supporting around 690,000 full-time equivalent jobs.
Westaway said Australia’s airport economic regulation remains subject to extensive independent oversight.
“Four successive Productivity Commission inquiries have found that the current regulatory framework remains appropriate and that airports have not systematically exercised their market power. Airports welcome the opportunity to engage constructively in the next independent review,” he said.
“The ACCC’s monitoring regime provides transparency over airport pricing, service quality and investment, while supporting commercial negotiations that deliver the infrastructure passengers and airlines depend on.
“Airports have been working with the Federal Government on providing enhanced data and transparency to the ACCC, a key initiative from the Aviation White Paper.
“Airport charges are typically set through long-term commercial agreements and do not fluctuate with demand in the way airline ticket prices can. They represent only a small proportion of the total airfare,” he said. “These charges help fund the critical infrastructure that passengers rely on every day.”
Record revenues, standout profits
The investment uplift comes as all four airports reported record aeronautical revenues in 2024-25, collectively earning $2.9 billion from airline-related operations.
Revenue growth occurred despite a moderation in passenger growth, which slowed to 4.6 per cent in 2024-25 compared to 13.7 per cent the previous financial year.
Sydney Airport remained the most profitable by a significant margin, generating $584.3 million in aeronautical operating profit and recording a 20.8 per cent return on aeronautical assets – the highest level observed in more than two decades of ACCC monitoring.
“Sydney Airport continues to earn significantly more aeronautical revenue and profit than the other major airports, both from a total and per-passenger perspective,” Brakey said.
“Sydney Airport’s aeronautical profits eclipsed all of the other airports combined, more than double Melbourne as the next most profitable.”
The ACCC attributed Sydney’s performance partly to its larger share of international passengers, who typically generate higher revenues than domestic travellers, as well as its status as Australia’s busiest airport.
Perth Airport recorded the strongest year-on-year profitability improvement, with aeronautical profit rising 73.7 per cent to $130.6 million.
Passenger growth moderates
Across the four airports, passenger numbers reached around 120 million in 2024–25, up 4.6 per cent year on year.
International traffic continued to drive growth, increasing 9.5 per cent to 40.4 million passengers. Perth led the pack with international passenger growth of 17.8 per cent, followed by Brisbane (16.3 per cent), Melbourne (8.3 per cent) and Sydney (5.5 per cent).
“While international passenger growth slowed from 2023-24 to 2024-25, the continued strong passenger growth reflects the willingness of international airlines to add services to Australia’s major airports,” Brakey said.
Domestic passenger numbers also rose, up 2.2 per cent to nearly 80 million, underscoring what the ACCC described as sustained demand for leisure travel and tourism within Australia.
Service ratings and construction impacts
In terms of passenger experience, Sydney, Melbourne and Perth were rated “good” overall for quality of services and facilities in 2024–25.
Brisbane Airport, while rated highest by passengers overall, saw its rating slip to “satisfactory” after lower scores from airlines. Carriers cited the impact of major construction works and flagged concerns around aerobridge availability and standard, check-in services and baggage processing facilities.
Car parking remains a cash cow
Beyond aeronautical revenue, car parking continued to deliver strong margins.
The four airports collectively earned $402.1 million in operating profits from car parking in 2023–24. Brisbane recorded the largest profit at $125.3 million, up 7.9 per cent, followed by Sydney at $108.7 million, up 11.1 per cent.
Melbourne and Perth both posted profit declines of around 8 per cent, to $101.3 million and $66.7 million respectively.
“Car parking continues to be a lucrative business with operating profit margins above 60 per cent at Brisbane, Perth and Sydney airports,” Brakey said.
“To save money, motorists are encouraged to book online in advance, or consider off-airport parking providers as they can be substantially cheaper for extended stays.
“Dedicated free waiting zones can also be a convenient option for collecting travellers.”
