Australia’s competition watchdog has called for a more effective regulatory regime for the major airports to constrain monopolistic behavior.
In its submission to Australia’s Productivity Commission’s inquiry into the economic regulation of airports, the ACCC Chairman Rod Sims said that “providers of key monopoly infrastructure such as the major airports are typically regulated to ensure that they will not exploit their market power to the detriment of consumers and the broader economy.”
However, this “is not currently the case with Australia’s major airports and it is important that key monopoly infrastructure such as Australia’s major gateways are regulated,” Mr. Sims said.
He added that “in a large country like Australia, airports are critical pieces of infrastructure that provide for services that bring families and friends together, support business travellers and drive tourism and economic growth. Australian airports now provide for over 150 million airline passengers each year.”
Currently, the ACCC undertakes only limited monitoring of the airports in Sydney, Melbourne, Brisbane, and Perth.
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“Monitoring regimes can influence behavior if there is a credible threat of regulation and this threat may have constrained behavior in the past when the airports were first privatized. However, we do not consider that the current regime is effective in constraining behavior,” Mr. Sims said.
The ACCC noted that the monitored airports have significantly raised aeronautical charges to airlines over time with only Perth airport “materially improving its overall quality of service.”
Parking charges also came in for attention in the ACCC submission with it noting that a study of international car parking prices found that short-term car parking prices at airports in Australia and New Zealand are higher compared with the average price at airports in both the Asia Pacific and the world.
Perth Airport has the lowest parking prices of the four major airports.
On June 22, the Government directed the Productivity Commission to undertake an inquiry into airport regulation in Australia.
The Productivity Commission has previously conducted similar inquiries in 2002, 2006 and 2011.
The Productivity Commission has so far received 55 submissions and is due to publish its draft report early in 2019 with a final report to parliament in June.
The inquiry has led to a war of words between the airports and airlines.
The ACCC has been directed by the Australian government to monitor the performance of the four largest airports until 2020.
It is required to monitor prices, costs, profits and quality of service of both aeronautical and car parking activities.
