Australia’s competition watchdog says recent investments in new infrastructure, as well as planned improvements in the period ahead, should help lift the passenger experience at Australia’s four largest airports.
The Australian Competition and Consumer Commission’s (ACCC) Airport Monitoring Report for 2014/15 says despite high profit margins at Brisbane, Melbourne, Perth and Sydney airports, the quality of service passengers have received has not increased in recent years.
Brisbane maintained its “good” rating and retained its place as the highest rated of the four monitored airports in the ACCC report, a position it has held since 2004/05. Perth was the only other airport to receive a “good” rating.
Melbourne Tullamarine and Sydney were rated as “satisfactory” in 2014/15, the same as the prior year.
The ACCC was hopeful quality of service levels would improve given planned or recently completed infrastructure improvements at the four airports such as Melbourne Tullamarine’s new domestic terminal, Perth’s new Terminal 1 international terminal and domestic pier and Brisbane Airport’s third runway project.
“Over the period from 2004-05 to present, there have been no significant improvements in any of the monitored airports’ average quality of service ratings,” the ACCC report said.
“Passengers are likely to benefit from a significant boost to investment, with the four monitored airports undertaking the largest aggregate capital spend on aeronautical assets since the airports were privatised.”
The ACCC said the four airports continued to achieve high profit margins from aeronautical revenue, such as landing fees and use of terminal facilities, and from car parking in 2014/15.
And in the case of Sydney Airport, the competition watchdog found one dollar of aeronautical revenue earned a record 50.1 cents of profit in 2014/15, which the ACCC said was the “highest by any monitored airport over the period from 2004-05 to 2014-15”.
“The high profit margins of the airports indicate that they do not face much competitive pressure,” ACCC Chairman Rod Sims said in a statement on Wednesday.
In contrast to the ACCC’s observation that the largely monopoly airports were exercising market power to increase prices and lower quality of service outcomes, Australian Airports Association chief executive Caroline Wilkie said the privatisation of the nation’s airports had served travellers well.
“The growth in passenger numbers and record levels of investment in our major airports demonstrates that the current approach to economic regulation of airports is delivering results for airlines and passengers,” Wilkie said in a statement.
“Airports and airlines have developed a mature and commercially sophisticated approach to negotiating over price, investments and service levels that meet the needs of airlines and their passengers.
“This helps to ensure the right investments are being made at the right time to support the growth and profitability of Australian aviation.”
Sydney had the highest aeronautical revenue per passenger in 2014/15 at $16.40, up 0.6 per cent from the prior year. Brisbane posted the largest increase in aeronautical revenue per passenger, which jumped 9.8 per cent to $12.22. Melbourne had the lowest result at $10.47, up 3.9 per cent, while aeronautical revenue per passenger fell 0.4 per cent at Perth to $12.64.
The ACCC report said the airlines using the four airports gave Melbourne, Perth and Sydney a “satisfactory” rating, while Brisbane was the only airport with a “good rating”. Sydney received the lowest rating out of the four monitored airports.
However, the ACCC said there was cause for optimism given the recent agreement between Sydney Airport and the Board of Airline Representatives of Australia (BARA) had a “service level framework” included for the first time.
“The service level agreement provides for the measurement of airport performance against various quality of service indicators for airlines and passengers,” the ACCC said.
“BARA advised the ACCC that this represents a significant step towards enabling improved service quality outcomes and hopes that other airports can adopt a similar arrangement where no framework exists or to enhance the existing framework.”
The ACCC report found all four airports continued to earn “significant profits” from car parking in 2014/15, given they were the only suppliers of car parking on airport grounds.
Sims said there were bargains to be had for those who took advantage of discounted pricing when pre-booking their parking online before coming to the airport.
“The ACCC found that consumers parking at the airports could save up to 66.5 per cent for longer durations by booking online,” Sims said.
“Consumers should consider all of their options, including whether they could obtain a cheaper rate by booking online or using an off-airport parking operator.”
The full report can be found on the ACCC website.