Australian Productivity Commission publishes report on economic regulation of airports

    Australia‘s Productivity Commission published (06-Feb-2019) a draft report on the economic regulation of airports. Highlights include:

    • The four airports monitored by the Australian Competition and Consumer Commission – Sydney Kingsford Smith Airport, Melbourne Tullamarine Airport, Brisbane Airport and Perth Airport – have not systematically exercised their market power to the detriment of the community. Each airport has generated returns sufficient to promote investment while not earning excessive profits;
    • There is no reason for airport operators to become complacent and further scrutiny of some aspects of airport performance are warranted, with tailored reforms needed to address specific areas of concern;
    • Sydney Airport’s cap on the number of aircraft handled hourly was deemed “unnecessarily restrictive”. The cap on aircraft movements restricts the effect of aircraft noise on local residents, although this reduces the airport’s efficiency;
    • Sydney, Melbourne, Brisbane and Perth airports have market power in services provided to airlines;
    • Sydney, Melbourne, Brisbane and Perth airports should be required to separately report revenues and costs of providing domestic and international services to airlines;
    • Airports could exercise their market power in landside access services, such as for those used by taxis and shuttle buses, to encourage people to use airport owned car parks, however there is insufficient data to determine whether this is the case;
    • Many consumers resent the cost of car parking at the monitored airports, however car parking charges are not due to airports exercising their market power;
    • Government funding for infrastructure investments at regional airports should be subject to rigorous published assessment. There is also considerable scope to improve the financial management of airport assets at some regional airports.