Beyond the headlines

The ACCC has also developed the habit of using the report as a platform to promote its agenda in favour of greater regulation of our major airports. This year the ACCC also put forward its views on the preferred operator of the new Western Sydney Airport, which was an interesting intervention given that Sydney Airport was still in discussions with the Commonwealth about exercising its long-standing and legislated first right of refusal to operate the new airport.

The ACCC’s love of a ripping media headline on airport charges or the cost of car parking does a significant disservice to our major airport operators and the travelling public. It does nothing to better inform the public about the sophisticated commercial negotiations and service level agreements which underpin the relationship between airports and airlines. These agreements also facilitate new investment in aeronautical infrastructure which support the operations and growth of airline businesses.

It was pleasing this year’s report acknowledged the good level of service to airlines and passengers that was being provided by all four airports. However, there were areas of the report of deep concern. For example, the report made a great deal of the fact that aeronautical revenues at our major airports have grown over the past decade. This is hardly surprising in the context of the similarly strong growth in the number of domestic and international passengers travelling through our airports. Passenger numbers at the Brisbane, Melbourne, Perth and Sydney airports have increased between 30 and 70 per cent over the decade since 2006.

Aeronautical revenues are based on charges per passenger, so this inevitably has led to an increase in revenue collected by airports. It’s a pretty straightforward proposition. However it was concerning the ACCC misleadingly asserted that airports have in fact over-collected aeronautical charges from airlines. Mr Sims said ‘The ACCC estimates that over the past decade, these airports have collected $1.57 billion more in revenue from airlines than they would otherwise have collected if average prices were held constant in real terms.’

At the same time Mr Sims was claiming airports have ‘overcharged’ airlines, there has been massive investment in new airport infrastructure which has driven growth in domestic and international aviation. All of the airports have collectively invested billions of dollars in new terminals and airside facilities to provide increased capacity for airlines and a better experience for their passengers. Ranging from brand new terminals through to new aprons and runways (under construction), our airports have been leading the way in providing new infrastructure to support the growth of Australian aviation.

Airports are delivering these projects in a very targeted, timely and efficient way. Compared to the logjams that seem to bedevil infrastructure projects outside airport zones, our airport operators are focused on providing new facilities for their airline customers that are delivered at the right time and provide the required level of service. Airlines are active participants in discussions on airport infrastructure and negotiations for its funding.

The ACCC’s push for re-regulation of our major airports is not new. Its submission to a 2012 Productivity Commission (PC) inquiry into the economic regulation of airports made similar claims about the need for more regulation. The PC rejected this push, noting the slightly more than decade-old privatised airport model was working well.

The ACCC’s re-regulation approach would lead to a cap on new investment in airport infrastructure, resulting in more congested runways, crowded terminals and jammed airport roads as investment in airport improvement projects was cut back. Airlines would have less capacity to grow their operations and passengers would have less choice of services and destinations.

Australia’s privatised airports model has delivered the right levels of investment and service which in turn have supported the growth of our commercial aviation sector and have delivered benefits across the Australian economy. While airport operators accept the role of the ACCC in providing independent oversight of pricing and service levels, it is critical that we don’t succumb to regulatory over-reach which would stifle investment and innovation at our largest airports.