Australia’s competition watchdog has given the Board of Airline Representatives of Australia (BARA) the green light to negotiate on behalf of its member airlines for a further 10 years.
The Australian Competition and Consumer Commission (ACCC) says BARA’s collective bargaining is likely to result in public benefits from cost savings associated with the pooling and sharing of resources.
“In addition, the ACCC accepts that there may be some public benefits in the form of promoting more efficient infrastructure investment and reducing information asymmetries,” the ACCC said in a draft determination on Wednesday.
“Further the ACCC accepts that to the extent the Australian Government mandates new security requirements, the proposed conduct may assist with its implementation including through enabling BARA to conduct industry-wide tender processes.”
BARA applied to the ACCC in October 2014 seeking ACCC reauthorisation to negotiate and bargain collectively on behalf of its 29 member airlines, which account for about 90 per cent of all international traffic to and from Australia.
ACCC authorisation would allow BARA to negotiate on the prices that airport operators, Airservices, the Bureau of Meteorology and other sole suppliers at designated international airports such as government-mandated security services provider Unysis charge its airline members.
BARA executive director Barry Abrams said the 10-year authorisation reduced industry compliance costs and provided the association with long-term operating certainty.
“Australia’s international aviation is facing significant challenges which will impact on air travel affordability and the economic growth the industry generates, Abrams said in a statement on Thursday.
“Increased costs at airports, heightened investment in air navigation technology and the competitive and reliable supply of jet fuel all need to be addressed over time.
“Under the ACCC’s authorisation, BARA’s member airlines can continue to pool their resources and expertise in seeking more innovative and cost-efficient solutions. Improving industry productivity creates greater value to be shared among passengers, airlines and suppliers.”
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BARA told the ACCC it estimated there was a saving of about $2 million in transaction costs for its member airlines for every agreement negotiated with the major international airports.
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