The federal government has rejected tougher regulation of Australia’s airports but has assigned the country’s competition watchdog to monitor airports for abuses of market power.
That comes on the heels of a pair of reports on airports: the Australian Competition and Consumer Commission’s annual airport monitoring report and the results of an inquiry by the Productivity Commission on current airport regulations.
The ACCC has called for tougher regulation of airports but the government has backed the commission’s contention that current regulations are adequate.
“The government broadly accepts the commission’s findings that the current system of regulation should be maintained but needed ongoing monitoring” by the ACCC, Federal Transport Minister Anthony Albanese and Assistant Treasurer David Bradbury said in a joint statement. “We will continue to monitor airport pricing closely and reserve the right to look at any regulatory options necessary if we find evidence of inappropriate behaviour by the major airports.”
According to the commission’s report, airports and airlines have taken differing views over the effectiveness of the “light-handed” regulatory scheme adopted under the Howard government, with airlines saying airports often adopt a “take it or leave it” negotiating tactics over airport charges.
Nevertheless, the report said neither side wanted a return to regulatory price setting, and the commission found that airport charges “look reasonable” in comparison to overseas airports and “do not point to the inappropriate exercise of market power.”
The commission said monitoring by the ACCC was intended to constrain airports from “inappropriately exercising any inherent market power” but noted that neither the regulator nor the government has acted when the ACCC has raised the possibility of abuses.
ACCC chairman Rod Sims has said monitoring alone is inadequate because it does not allow the regulator to assess whether airports have misused their market power.
“You either regulate them or you don’t,” Sims said. “The Productivity Commission and the government have decided not to.”