Australian airports should face closer financial scrutiny, but not an independent arbitrator, the Australian government says.
The government has agreed with many of the findings of the Productivity Commission’s (PC) Inquiry into the Economic Regulation of Airports, which found in its final report the existing airport regulatory framework remains “fit for purpose”.
Airports should face closer financial scrutiny, be more accountable to the travelling public and receive a review by the Australian Competition and Consumer Commission (ACCC) into quality of service indicators, the Department of the Treasury agreed.
Likewise, the government supports the findings by the PC that a new independent arbitrator is not necessary, despite it being one of the key demands from airlines.
On the contrary, the ACCC recommended in March that independent commercial arbitration of Australian airports be instated, and noted that the “major airports exhibit strong natural monopoly characteristics” and, consequently, “face very little competition in the supply of aeronautical services”.
Airlines for Australia and New Zealand (A4ANZ) said that the government’s refusal to act on “monopoly airports” and their super profits will hurt the Australian economy in 2020.
“By saying the ACCC need to monitor the airports more, the government is admitting there is a problem,” A4ANZ chairman Graeme Samuel said in a statement.
“Yet they have squibbed the chance to actually do something about it for the Australian travelling public.”
“This is despite the government having a solution in front of them; the modest, evidence based reforms proposed by the ACCC, which would see the introduction of an independent umpire to resolve disputes between airports and their customers, improving efficiency and delivering benefits to consumers and the economy.”
The Australian Airports Association (AAA), which accused airlines of squeezing capacity and arcing airfares in September, has welcomed the federal government’s response.
“The [Productivity] Commission’s rigorous and independent analysis has confirmed our system is working well and airport investment is delivering benefits to the economy and community,” AAA CEO Caroline Wilkie said.
“We are pleased to see the government endorse the [Productivity] Commission’s findings, providing regulatory stability to support the $20.6 billion in airport investment that is planned over the next 10 years.”
