The sky is not the limit

Clearly the increase in passenger numbers at our main airports is putting greater pressure on existing aeronautical infrastructure and landside arrangements and is contributing to increased congestion. Fortunately airport investments, which are essential for increasing capacity at all the monitored airports, increased during the monitored period. As the ACCC report shows, the airports involved invested almost $550 million into the continued delivery of critical airport infrastructure in 2011-12. All of the airports covered in the report are undertaking, or have plans for, significant new investment including new terminals, runways and landside infrastructure.

Sydney Airport completed a 4,500m2 expansion of Terminal 2 last year to add five gates, new check-in counters at both terminals, self-service check-in kiosks at Terminal 1, more SmartGates and upgraded bathrooms at both terminals. Melbourne Airport is starting work on a new domestic terminal precinct that will provide capacity for up to 10 million passengers a year when it opens in 2015. Perth Airport has opened a new terminal servicing the needs of approximately 3,000 passengers a day. Brisbane and Adelaide Airports have opened new carparking facilities that have increased capacity by more than 75 per cent at Brisbane Airport and by 169 per cent at Adelaide Airport.

Airports are capital-intensive businesses underpinned by their principal role as transport infrastructure providers. The pipeline of investment set out in the ACCC’s report is supporting growth across the Australian economy including tourism, business, education and trade, enabling the movement of ever-increasing numbers of passengers making domestic and international trips, as well as growing volumes of air freight. There has been $9 billion invested in aeronautical infrastructure since privatisation, and another $9 billion planned for the next decade, so it’s clear that our major airports are making massive investments in airport infrastructure.

It is also clear most of the media coverage following the release of the ACCC’s airport monitoring report focuses on the price and customer experience indicators and assessments only. The media has mostly failed to notice that the price and quality of service monitoring role for the ACCC was introduced almost two decades ago following the privatisation of major airports. The Australian airport system has matured greatly in the period since.

As the ABC’s Consumer Affairs reporter Amy Bainbridge reported online: “The ACCC report seems at odds with a Productivity Commission report released last year. It said Australian airports had achieved relatively low revenue per passenger, relatively low total costs, operating costs and staff costs, while at the same time having above-average capital investment and delivering high profits. The Productivity Commission also found that parking prices were not “excessive” when taking into account land values and other indicators.”

The criteria used by the ACCC for assessing prices and quality of service at the monitored airports is currently being reviewed following recommendations by the Productivity Commission in 2011. Changes to the monitoring system could, and should, include a number of those outlined in AAA’s submissions to the Department of Infrastructure and Transport so far, such as:

• Baggage trolleys – the increasing use of wheeled bags has reduced the need for baggage trolleys by the vast majority of passengers. Different types of travellers have different requirements therefore counting trolleys has no bearing on service provided.

• Check in facilities – counting check in counters, or people operating counters reflect service quality less and less. Rapid changes to check-in technology means that no objective measure will stand the test of time. This technology is not implemented by all service providers at each airport, but skew the results of any measurement. As Qantas has demonstrated in some of its domestic terminals, the likely future of check-in is for most passengers to check in off-site, with self-service bag-drop being the primary activity in the check-in hall in the long term.

It would appear the ACCC is somewhat behind the game in its coverage of the dynamic and fast-moving airport sector.