Airlines back ACCC call for more regulation on ‘monopoly’ airports

It comes as the four major airports (Sydney, Melbourne, Brisbane, and Perth) – which are all effectively “geographic monopolies” – embark on roughly $19 billion in works over the next decade, which the ACCC says could result in increased charges being passed on to passengers.

“There is less of a threat of regulatory action than there was when the regime was first introduced over two decades ago,” the watchdog said.

“An airport not constrained by competition or regulation could be expected to exercise its market power to earn monopoly profit to the detriment of airport users and the broader economy.

“A commercial arbitration scheme would help to address concerns with the major airports exercising their market power, which would help to reduce airport charges faced by airlines including those that operate in regional locations.”

According to Airlines for Australia and New Zealand (A4ANZ) chair Professor Graeme Samuel, the submission shows that “monitoring and reporting of airport prices, costs, profits, and service quality do not amount to an effective constraint on the major airports from exercising their market power”.

“With airports planning more than $44 billion in capital investments, passenger charges are set to rise substantially, inevitably feeding into higher airfares and cargo prices. Consumers deserve transparency and protection from monopoly airports using their market power,” he said.

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Samuel backed the call for an arbitration scheme, saying it would “ensure fair and efficient commercial negotiations between monopoly airports and airlines”.

“Commercial arbitration frameworks are common in other industries and cover all significant agreements. Arbitration would incentivise airports to negotiate in good faith and prevent excessive charges that harm consumers and the broader economy,” he said.

Samuel also pointed to a recent High Court decision in New Zealand to dismiss airports’ appeal against the NZ Commerce Commission’s pricing framework, saying the NZCC had “recognised the importance of safeguarding consumers from excessive airport charges”.

“Given the similarities between Australia and New Zealand’s aviation markets – both characterised by privately run airports and limited regulatory oversight – this ruling provides a clear signal for Australian policymakers,” he said.

“Higher airport charges lead to higher airfares. Without reform, Australian consumers will continue to pay the price. It’s time for action to introduce a negotiate-arbitrate regime and restore balance to the aviation sector”.

For its part, the Australian Airports Association has come out against the proposal, with chief executive Simon Westaway saying existing regulations “continue to support strong outcomes for passengers and airlines, while encouraging private investment and innovation across the airport network”.

“Four separate Productivity Commission reviews have found the framework to be fit-for-purpose and found no evidence of systematic misuse of market power by major airports,” he said.

“The AAA welcomes the Productivity Commission inquiry into regional airfares and looks forward to demonstrating that airport charges remain fair, transparent and a relatively small component of overall ticket prices under the current system.

“The AAA also supports the planned review of airport economic regulation as part of an evidence-based approach to aviation policy.

“In its most recent comprehensive inquiry, the Productivity Commission found no clear evidence that airport negotiate–arbitrate models deliver better outcomes, and warned they could even leave passengers worse off than the current approach.”

Current and planned airport capital works programs include new runways in Melbourne and Perth; new terminals in Perth and Brisbane; and terminal redevelopments in Sydney.