Aviation

“Disappointing”: Airline industry slams Productivity Commission’s airport regulation recommendations

Huntley Mitchell

Huntley Mitchell

The airline industry has urged the Productivity Commission to rethink the recommendations contained in its draft report from the Inquiry into the Economic Regulation of Airports.

According to the report, released today, the four airports monitored by the Australian Competition and Consumer Commission – Sydney, Melbourne, Brisbane and Perth – have not systematically exercised their market power to the detriment of the community.

The report said each airport has generated returns sufficient to promote investment while not earning excessive profits.

“Most indicators of the monitored airports’ operational and financial performance are within reasonable bounds, although some could present cause for concern if considered in isolation,” it said.

The report found there was no reason for airport operators to become complacent, noting that further scrutiny of some aspects of airports’ performance is warranted, and tailored reforms are needed to address specific areas of concern.

“Sydney, Melbourne, Brisbane and Perth airports have market power in services provided to Airlines, according to the report,” it said.

“Charges to airlines for international services at Sydney and Brisbane airports, in particular, are high compared to overseas airports.”

The Productivity Commission recommended that Sydney, Melbourne, Brisbane and Perth airports should be required to separately report revenues and costs of providing domestic and international services to airlines.

It also said separate reporting is needed to determine whether charges are the result of an airport exercising its market power, or the higher costs of providing international services.

The report found that airports could exercise their market power in landside access services, such as for those used by taxis and shuttle buses, to encourage people to use airport-owned car parks, but there was “insufficient data” to determine whether this is the case.

“The collection of detailed data on access charges, terms of access, costs and revenues for landside services would enable an assessment of exercise of market power in landside access,” it said.

On balance, The Productivity Commission found that commercial negotiations between airports and airlines give little cause for concern.

However, it did note that some agreements contain clauses that constrain an airline’s access to regulatory remedies for the exercise of market power and clauses that restrict an airport’s ability to offer incentives to airlines other than the signatory airline.

“These clauses are anticompetitive and should be removed from all agreements,” it recommended.

The report acknowledged that while many consumers resent the cost of car parking at the monitored airports, car parking charges are not due to airports exercising their market power

It said that the price of parking at-terminal can largely be explained by the value passengers place on convenience, the limited amount of land close to the terminal, and the need to manage congestion.

Qantas and Virgin Australia will be disappointed by the report, having accused the airports of gouging them, and were hoping the Productivity Commission would recommend a new body that could rule on disputes.

Airlines for Australia and New Zealand (A4ANZ) has issued a scathing response to the draft report, and calling for the Productivity Commission to urgently rethink its recommendations.

“It beggars belief that the PC could simply set aside such highly credible evidence from experts both in Australia and internationally in their choice not to suggest real change,” A4ANZ chair Graeme Samuel said.

“It is clearly a totally inadequate solution to simply suggest increased monitoring in a regime that the ACCC itself acknowledges has no powers to enforce.

“It is similarly useless to make additions to pricing principles which are currently ignored by airports in their negotiations with customers, as there are no penalties for non-compliance.”

A4ANZ chief executive Alison Roberts said that none of the recommendations, if ultimately adopted by government, would change the status quo, and more unproductive disputes were likely to occur.

“We are not seeking restrictive regulations imposed on airports – we know that can stifle growth,” he said.

“But as an industry, we can’t do nothing. We need a regime that encourages innovation and efficiency and we don’t have that right now – we just have high airport profits at the expense of consumers.

“What is needed isn’t complex. Access to arbitration when negotiations break down should be provided for all airports with monopoly characteristics. This is standard, commercial practice. Why should airports be treated any differently?”

The Productivity Commission continue to accept submissions to its inquiry before delivering the final report within the next 12 months.

SEE WHAT PEOPLE ARE SAYING

Leave a Reply

News

How Travel Weekly has got your back during the COVID-19 crisis

We’ve come up with a few initiatives to help you recover from the impact of the COVID-19 crisis and come out the other side stronger than ever. Find out what they are here.

Share

CommentComments

Events

Women in Travel Awards winners’ circle: Siobhan Foley, Accenture

Looking for some inspo for your Women in Travel Awards entry? Siobhan Foley’s story will have you hitting ‘submit’ in no time.

Share

CommentComments

Destinations

Aloha Friday Wrap: Hawaii’s message to travellers, Hawaiian Airlines helps out medical workers + MORE!

This week’s Aloha Friday Wrap details how the US island state and its airline are responding to the COVID-19 crisis, and also provides some holiday inspo for once things return to normal.

Share

CommentComments

Destinations

“Aloha from our home to yours”: Hawaii’s message to travellers

Amid the COVID-19 pandemic, the Hawaii Tourism Authority has asked travellers to postpone their trips to the US island state so it can effectively address the health crisis.

Share

CommentComments

Aviation

Hawaiian Airlines to support medical workers with complimentary flights

Hawaiian Airlines will provide complimentary neighbour island flights for medical professionals during the month of April to support travel associated with COVID-19 response efforts.

Share

CommentComments

Destinations

Here’s how your clients can experience Oahu’s rich history and culture

by Ashlee Galea

An integral part of making a Hawaii holiday amazing, aside from beach time and tropical cocktails, is taking a deep dive into the culture and history of the Hawaiian Islands.

Share

CommentComments

Cruise

Carnival president slams NSW government’s “bitterly disappointing” treatment of cruise industry

by Ali Coulton

Sture Myrmell says the state government is not only putting remaining crew members at risk, but also impacting the cruise industry as a whole.

Share

CommentComments

Aviation

Qantas under investigation following cleaner’s suspension

Following news that ASIC would investigate Qantas, SafeWork NSW has launched a probe into the suspension of an aircraft cleaner who was employed by the national carrier.

Share

CommentComments

Destinations

“The world will soon return”: Abu Dhabi says city’s silence is a time for reflection

by Christian Fleetwood

Abu Dhabi has released a message of hope, looking forward to the moment the emirate can welcome the world again.

Share

CommentComments

Destinations

WATCH: Empty Welsh streets taken over by tribe of goats

In the deserted streets of Llandudno in northern Wales, where residents are on lockdown, goats have descended from the Great Orme and into the town.

Share

CommentComments

Technology

Webjet pulls plug on cruise sales business, actions 440-plus redundancies

by Huntley Mitchell

The online travel company has resumed trading on the ASX, but not before detailing some harsh measures to mitigate the impact of the COVID-19 outbreak.

Share

CommentComments

Hotels

Marriott suffers data breach involving 5.2 million guests

What started as a headache for Marriott’s boss amid the COVID-19 crisis has turned into a migraine following this unfortunate news.

Share

CommentComments