Airports-Airlines go head to head on charges

The Australian airport pricing debate moves to Singapore in November 2006, at a key industry event, ahead of the final submission of the Australian Productivity Commission's report into pricing at major Australian airports in January 2007.

“The intensifying debate over airport charges in Australia will move to a neutral venue in Singapore in a special Airport Pricing segment of the Aviation Outlook Summit in November 2006. Senior officials from airlines, as well as Australia's Productivity Commission and the UK CAA’s pricing regulator will be addressing this increasingly contentious issue, within the context of the broader aviation outlook for the year ahead,” said Peter Harbison, Executive Director of the Centre for Asia Pacific Aviation.

Australia’s Productivity Commission has just released a Draft Report into its review of price regulation of airport services in Australia, stating that the move from price regulation to ‘light handed’ price monitoring has “produced important benefits”. The Commission stated it found no evidence of systematic misuse of market power by major airports in Australia in setting aeronautical charges for services, such as runways and terminal use, although the behaviour of airports in a ‘light handed’ regulatory regime “will only become fully clear once negotiation of the next round of multi-year price agreements has been completed”.

The Commission also stated the behaviour of airports on some non-price terms and conditions of access, such as the allocation of gates, had been “less than satisfactory”. The Commission proposed a further five-year period of price monitoring for Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney airports. A final report will be submitted to the Australian Government in January 2007.

“Whatever the Commission’s final report concludes, this seems to rule out the prospect of any more detailed control over aeronautical charges at Australian airports in the near future. Similar approaches by the UK and New Zealand regulators suggest that this form of ‘light handed’ regulation is becoming the global norm, which would not be welcome news to airlines,” concluded Mr Harbison.

Qantas has said that it was disappointed at the Productivity Commission’s Draft Report, stating it was “amazed” that the Commission would “continue to support the unfettered monopoly power of Australia’s airports.” The airline went on to say it is particularly concerning that the Productivity Commission had rejected the airline's request for binding arbitration where airlines and airports are in dispute over pricing and non-price terms and conditions.

Aviation Outlook 2007 will take place 9-10 November 2006 at the Pan Pacific Hotel.

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