Friday, March 30, 2012

Inquiry rejects tougher airport regulation

The federal government will encourage the competition regulator to keep an eye on how much Australia's airport operators charge for passenger and visitor services, such as parking and ground transport.

In a joint statement, Transport Minister Anthony Albanese and Assistant Treasurer David Bradbury said this would help improve the transparency of prices charged by airports.

The government would also encourage the Australian Competition and Consumer Commission (ACCC) to recommend inquiries if it believed airports were abusing their market.

But the government stopped short of recommending any major regulatory changes and backed a Productivity Commission report released on Friday, which found the current system should be maintained, together with monitoring by the ACCC.

ACCC chairman Rod Sims said the watchdog monitored airport performance and it was not enough.

"Monitoring does not allow you to assess whether there's been any misuse of market power," he told AAP.

He argued that tougher regulation of airports were needed, rather than "tweaks" to the current monitoring rules recommended in the Productivity Commission report.

"You either regulate them or you don't," Mr Sims said.

"The Productivity Commission and the government have decided not to."

Mr Sims said the major airports operators clearly had market power.

"Any market organisation that has market power is of course going to use it and therefore we think regulation is required," he said.

The commission said that while fees for airport parking and access for private vehicles, taxis, buses, shuttles and trains did not appear excessive, information about terms and conditions of access was less transparent.

It said the ACCC should monitor and publish prices, costs and profits for car parking and information on parking capacity.

But the Productivity Commission also acknowledged airport parking prices reflected "fixed and variable costs of the service, the inbuilt over-capacity inherent in catering to peak demand and the opportunity cost of the land".

The commission's report into the economic regulation of airport services, which more broadly examined how regulation supported continuing investment in infrastructure, was released on the same day as the ACCC's airport monitoring report for 2010/11.

The ACCC report compares prices, profits, services and other measures across Australia's five major airports, in Sydney, Melbourne, Brisbane, Perth and Adelaide.

It found car parking revenue for all five major airports increased by between 7.4 per cent and 23.5 per cent in 2010/11.

Melbourne led the way with revenue of $114.6 million, followed by Sydney, Brisbane, Perth and Adelaide.

However, Australian Airports Association executive director Caroline Wilkie said the Productivity Commission's findings confirmed airports weren't abusing their market power.

"Despite insinuations by the ACCC that airports earning money is somehow inappropriate, the Productivity Commission has found that Australian airports' aeronautical charges, revenues, costs, profits and investment are comparable to overseas airports," she said in a statement.

The Productivity Commission also recommended the ACCC extend its monitoring of airports for another seven years to 2020.

"We will continue to monitor airport pricing closely and reserve the right to look at any regulator options necessary if we find evidence of inappropriate behaviour by major airports," Mr Albanese and Mr Bradbury said in their statement.

The Productivity Commission is an independent government research and advisory body.

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