ACCC calls for better regulations for “exploitative” airports

By Alexandra Coulton

The Australian consumer watchdog is calling for stricter economic regulations on the country’s major airports to prevent them exploiting their market power.

In a submission made by the ACCC to the Productivity Commission’s inquiry into the economic regulation of airports, the watchdog noted that major airports have significantly raised aeronautical charges over time.

In the past decade alone, revenue per passenger has increased by 59 per cent at Perth Airport, 36 per cent at Brisbane Airport, 31 per cent at Melbourne, and 13 per cent at Sydney.

Despite its more subdued rate, Sydney still maintains the highest revenue per passenger of all four airports, almost doubling its charges just before it was privatised in 2002.

ACCC Chair Rod Sims said the high charges need to be addressed by a more effective regulatory regime.

“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.”

The ACCC also expressed concerns over airports market power as the only providers of car parking on airport grounds.

They found that car park revenue has grown significantly over the last decade.

The operating profit margin across the four monitored airports was 64 per cent in 2016-17.

“A study of international car parking prices also found that short-term car parking prices at airports in Australia and New Zealand are higher compared with the average price at airports in both the Asia Pacific and the world,” Sims said.

The ACCC said it has concerns about airport market power in car parking and landside access services but does not recommend stronger regulatory oversight for these activities beyond the current monitoring arrangements.

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

“In its monitoring and reporting the ACCC could inform consumers of the parking and travel options available. To promote competitive transport options the government could provide a formal direction to the ACCC to monitor landside access services which facilitate competition with on airport parking.”

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