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ACCC says passenger experience little improved despite increasing airport profits

written by australianaviation.com.au | April 9, 2015
An aerial image of Sydney Airport. (Sydney Airport)
An aerial image of Sydney Airport. (Sydney Airport)

Travellers at the nation’s four largest airports have experienced little to no improvement in the passenger experience despite ever increasing profits, the Australian Competition and Consumer Commission (ACCC) says.

The competition regulator’s Airport Monitoring Report for 2013/14 says Brisbane, Melbourne, Perth and Sydney airports achieved increases in aeronautical revenues in real terms, both in total and on a per passenger basis in the most recent financial year. Moreover, total aeronautical operating margin also increased in real terms at each airport.

“Despite some significant investment, the monitored airports have continued to generate substantial revenue and profitability increases, yet we are not seeing any substantial increases in the overall average quality of service indicators at these airports,” ACCC chairman Rod Sims said in a statement on Thursday.

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“In fact, service quality at all monitored airports has declined over the past decade, despite higher unit revenues at all airports.”

In 2013/14, Melbourne Airport received the equal lowest overall average quality of service rating, scoring 3.4 out of five, maintaining its “satisfactory” rating from the prior year.

Perth Airport, whose rating declined 1.4 per cent, also came in at “satisfactory” with a score 3.4.

Sydney climbed off the bottom for the first time since 2003/04, improving its rating 4.7 per cent to 3.5 out of five, moving up from “poor” in 2012/13 to “satisfactory”.

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“We’re pleased that our investment in services and facilities has been recognised by our 38.5 million passengers a year and our airline customers with higher overall quality of service ratings,” Sydney Airport chief executive Kerrie Mather said.

“We also continue to consult closely with our airline partners to ensure that our investment in airport infrastructure reflects the needs of their businesses and is in line with demand.”

Brisbane Airport was the only airport to achieve an overall average quality of service rating of “good”, scoring four out of five for a second year. The airport said in a statement it had achieved the highest rating in this category in the ACCC report for 11 years in a row.

“The survey results are very important as it provides an unbiased measure of where we sit in relation to other airports and what areas we need to concentrate on,” Brisbane Airport chief executive Julieanne Alroe said.

An ACCC chart of airport service ratings and profits in the 10 years to 2013/14. (ACCC)
An ACCC chart of airport service ratings and revenues in the 10 years to 2013/14. (ACCC)

All airports reported increased aeronautical revenue per passenger in 2013/14, compared with the prior year. (See table below)

And Sydney Airport had the highest aeronautical operating margin per passenger at A$8, followed by Perth (A$5.47), Melbourne (A$4.48) and Brisbane (A$4.67).

The Board of Airline Representatives in Australia (BARA) said the ACCC report highlighted the need for airport operators and international airlines to reach alignment over capacity and quality of services provided to airlines and passengers.

“BARA’s preference is for commercially negotiated agreements with airport operators that are aligned with improved outcomes for airlines and passengers at reasonable and justifiable prices,” BARA executive director Barry Abrams said in a statement.

“No one pretends such negotiations will necessarily be smooth but new agreements must be better aligned with improving outcomes rather than simply rolling forward the status quo.”

Australian Airports Association (AAA) chairman Stephen Goodwin said the ACCC report showed the four airports spent $893.5 million on aeronautical infrastructure in 2013/14 to improve facilities and and services and were due to invest a further $9 billion over the next decade.

“The multi-billion dollar levels of investment that are occurring at each of these four airports is evidence of an unwavering commitment to continually improve and develop the services we provide our customers,” Goodwin said.

The ACCC report found all four airports grew their car parking revenue in 2013/14.

While three out of the four – Brisbane, Perth and Sydney – also managed to grow car park operating margin, Melbourne Airport reported a 1.4 per cent decrease in a year where the total number of car spaces at Tullamarine increased by 9.4 per cent to 24,406.

Melbourne Airport chief executive Chris Woodruff said average car parking prices were down about one per cent after the introduction of new prices in July 2014, which falls outside the reporting period.

“Our online booking facility is proving increasingly popular with customers and for good reason, as people can save up to 65 per cent by simply booking online,” Woodruff said.

“We’re also investing in new technology to improve the overall car park experience with bay-finding technology introduced earlier this year and ‘find my car’ technology coming soon.”

Aeronautical revenue per passenger (in A$)
—————-2013/14      2012/13
Brisbane        10.94     10.81
Melbourne    9.90       9.59
Perth              12.47      11.22
Sydney           16.00     15.91
(Source: ACCC)

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5 Comments

  • Joel M

    says:

    Can anyone tell me what the Quality of Service KPIs are for airports? I’m curious as to what they are actually being judged on.

  • Miles Harrison

    says:

    Interesting article but surprising, from a business user point of view which I know is a minority I think Australian airports have improved massively. Even when not using a lounge overall airports are constantly improving and doing a great job. Sydney huge improvement, Melbourne new terminal coming and okay frustrating in the old terminals, Perth finally getting an upgrade. Maybe the fact that so much building work and improvements are happening negates the true value of the flight experience currently. As a business traveler, Qantas and Virgin are getting closer to lounges around the world and even as a non business traveler the experience personally has improved . Obviously the survey was carried out on people who have been to Hong Kong. We are doing well, based on the world airports I Frequent.
    Regards

    Miles Harrison

  • Craigy

    says:

    What a non-event report from the ACCC. How are you suppose to improve the passenger experience with numbers increasing yet available floor space pretty much fixed. Like Joel, I would like to see what items where measured for the ACCC to come up with this report.

  • GAGA

    says:

    With privatisation and no competition, what does anyone expect? People need to fly, they don’t have a choice of airports and private companies want profit. What incentive do the airport operators have to spend on improved service when they can just pocket the money for themselves?

    On the service, I can’t say I’ve ever noticed any difference apart apart from increased security queues (and I’m going back many, many years to remember the time of quick security checks). Transport/food/trolleys etc has always had big markups in price.

  • JJH

    says:

    All Australian airports should learn a lot from the operations, customer service and facilities at Singapore’s Changi Airport. The Singapore Government has not fallen into the privatisation trap and operates the airport as a service to both travellers and non-travellers (it’s a popular “day-visit” destination for residents. Customers have voted it best airport in the world for the past three years (source: Skytrax), while the 2015 results see the highest ranking Australian airport as being Brisbane at 20th place.

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