The long view

In its report, the ACCC has highlighted continued growth in passenger numbers and higher charges for airport services which has led to increased aeronautical revenue and revenue for airport operators.

The AAA has noted the ACCC’s findings in its latest report, but has also highlighted some of the shortcomings in the ACCC’s approach. In particular, the conclusions in the report do not fully reflect the detailed and commercial nature of agreements between airport operators and airlines over investment in aeronautical infrastructure.

It also needs to be noted that the ACCC report looks back at the state of our major airports at a point in time. In fact, by the time the ACCC publishes its report, almost a year has transpired since the period under review.

Anyone travelling through our major airports knows that a lot can happen in a year in terms of the delivery of upgraded or new infrastructure. You only need to look out the aircraft window to see a wide range of projects underway to improve aeronautical infrastructure at Brisbane, Melbourne, Perth or Sydney airports.

In its report, the ACCC noted the continued growth in passenger numbers and higher charges for airport services which has led to increased aeronautical revenue and revenue for airport operators.

It’s an indisputable fact there has been tremendous growth in domestic and international aviation over the past decade in Australia, and elsewhere in the Asia Pacific region. As a result, that has led to higher revenues for airport operators as airport charges are levied on a per passenger basis.

These increased revenues have been invested in improved or new aeronautical infrastructure that has driven the growth in domestic and international aviation and which will continue to deliver the capacity for growth in the future.

A review of the master plans for our major airports reveal the scale of investment that is being proposed, in the form of new terminal facilities, new runways and apron, and other aeronautical services that will provide more capacity and better services and facilities for airlines and passengers.

While it’s legitimate for the ACCC to comment on issues such as congestion and the need for more capacity in future, it should at least give greater regard to the significant programs of investment that are being proposed when making commentary on these issues.

The ACCC also tends to understate the role of airlines in agreeing to the scope of investment, and the level of service they negotiate when reaching agreement with airport operators on user charges, which take the form of five-year aeronautical services agreements.

The amount and timing of investment in new infrastructure is negotiated at length and in detail between airport operators and airlines through these agreements. They provide certainty for airlines about the charges they will be paying, the services they expect to receive, and the level of investment to be made in aeronautical infrastructure.

In its report, the ACCC does not fully reflect the fact that the infrastructure investment pipeline is commercially negotiated between providers (airports) and users who pay for it (the airlines). Airport users don’t go into the process with their eyes wide shut.

Some of the ACCC’s observations around airport congestion and complaints from airlines about the availability of facilities such as parking bays and apron were a consequence of works being carried out to provide more capacity and better services for airlines.

One of the challenges of upgrading airport infrastructure is that projects are carried out while airport operations are required to carry onas normal around them.

Runway upgrades at Brisbane, apron pavement replacement at Melbourne, terminal upgrades at Perth or new airfield developments at Sydney will inevitably have some impact on the availability of existing airport facilities while those works are underway.

Airport operators don’t have the luxury of closing the airport to carry out works. They are committed to delivering these projects while maintaining the safety and security of their facilities for staff and passengers alike and minimising the disruption to schedules and service levels.

The ACCC’s claim that overall quality of service ratings for three of four reports remained unchanged at ‘satisfactory’ also creates a misleading impression. A satisfactory rating does not necessarily mean that airport operators are not delivering againstthe commercially negotiated service levels with their customers. The ACCC uses its own methodology to develop these ratings; they do not necessarily reflect the service level agreements that are covered in commercial agreements and which drive the levels of service, investment and price.

There are also a range of other influences on the efficiency of airport infrastructure and the satisfaction of airport users, some of which are out of the control of airport operators. These include government-imposed restrictions such as curfews and movement caps; air traffic management policies; and, particularly in respect of landside access issues, the increasingly urgent requirement for state governments to give more priority to airport access and their connectivity to metropolitan transport systems.