Much ado about service

Cornerstone to the coverage was ACCC Chairman Rod Sims’ broadside that while “monitored airports continued to be profitable…the overall quality of service was lower at all airports compared with the previous year.”

The ACCC added that overall ratings for the quality of service at each of the monitored airports decreased in 2011-12.

For the first time since 2007-08 it added no airport achieved an overall rating of at least ‘good’.

With Sydney and Perth ranked the worst, they bore the brunt of the bad publicity. But Sydney was ready nonetheless with a five-page return of salvo at the ACCC.

“For the first time since 2007-08… no airport achieved an overall rating of at least ‘good’.”

Sydney Airport said it “welcomed” the ACCC’s monitoring report…which found that passenger satisfaction at Sydney Airport has increased to its highest level in 10 years as a result of greater value and choice across the airport and strong investment in improved facilities.”

Sydney Airport CEO Kerrie Mather added: “in fact Sydney Airport was the only airport to have increased its passenger rating this year, a result of the investments we’ve made to add capacity, streamline check-in, screening and arrivals processes and add value for passengers, including free WiFi and improved terminal facilities.”

However, the ACCC methodology combines the passenger rating with airline rating with the latter somewhat less forgiving than passengers, while airports complained the data was old and, of course, that is true but some airports trot out the same excuse every year.

The ACCC’s main area of concern centered on infrastructure investment.

“It is apparent that continued growth in passenger numbers at most airports is placing pressure on existing aeronautical infrastructure, contributing to lower service standards. More investment is required to avoid excessive congestion, and ensure that the needs of Australia’s travellers can be adequately accommodated,” said Sims.

In this year’s report, the ACCC added that it outlined evidence of congestion “which in the absence of additional investment may lead to possible capacity constraints in the future. For example, over the past ten years, there has been a falling trend in the proportion of flight movements that are “on time”.

“However, Australian Airports Association CEO Caroline Wilkie responded that it did not accept the ACCC’s suggestion that the quality of service outcomes reported for 2011-12 mean airport operators are falling behind in the delivery of airport infrastructure.”

“With $9 billion invested in aeronautical infrastructure since privatisation, and another $9 billion planned for the next decade, it is clear that our major airports are making massive investments in airport infrastructure,” said Wilkie.

ACCC commissioner Joe Dimasi warned that airports were “leaving investment in infrastructure to the very last minute”.

While acknowledging the extraordinary growth –particularly at Perth Airport – Dimasi said operators “must respond more quickly with investments. Airports are a very important part of the economy and they must monitor more closely traffic trends, ” he said.

Dimasi conceded, however, the ACCC was powerless to enforce any measures to bring Australia’s airports to account.
“All we can do is to shine a light on their performance, ” he said.

The 2011 Productivity Commission inquiry into the economic regulation of airport services found that four of the five monitored airports retained sufficient market strength to be of policy concern.

So last year the Federal Government directed the ACCC to monitor the performance of the four largest airports until 2020 to try to make them more accountable.

Former Qantas CEO Geoff Dixon said airport privatisation had been a failure, although some would argue that Qantas was better off in government hands as well.

There is no doubt a conundrum for an airport operator responsible to its shareholder to produce the best financial result on Commonwealth land, serving primarily State interests.

By any measure there is some degree of disconnect of interest and objectives.

Some in government readily agree that a more robust set of accountability markers should have been put in place when the airports were sold, although those markers or gates would have no doubt driven down the sale price.

Perhaps it’s time for the Commonwealth to investigate loan guarantees or similar to assist airports make speedier and also longer term investment decisions.