BARA responds to Productivity Commission’s Draft Report on the Economic Regulation of Airports

    The Board of Airline Representatives of Australia (BARA) has responded to the Productivity Commission’s Draft Report on the economic regulation of airports.

    Problems with airport services and potential efficiency gains

    A detailed member survey in BARA’s initial submission carefully explained the believed problems international airlines experience with the provision and management of airport services for international flights.

    “BARA was surprised to learn the Productivity Commission questions the motivation of international airlines in raising concerns about the quality of airport services. There is no basis to assert that international airlines have sought to ‘game’ the regulatory system by giving low ratings. BARA has provided the Commission with more evidence that covers international on time performance, baggage and some highly unacceptable airfield services outcomes at Sydney Airport,” Barry Abrams, Executive Director of BARA said.

    According to BARA, key issues include:

    • At Sydney and Melbourne airports, international flights are only able to achieve average on time departures performance when measured against world standards.
    • The estimated 100,000 mishandled international bags in 2018 across the major international airports is far higher than necessary.

    BARA estimates that with improved airport services, international on time departures performance at Sydney and Melbourne airports could be improved by about 6 percentage points. The number of directly checked-in mishandled bags could also be reduced by some 24,000 a year. Passengers would receive much better outcomes. Across all the major international airports, international airlines could save some $270 million in additional operating costs over the next 5 years.

    On time departures performance, international flights at Sydney and Melbourne airports

    Source: BARA and Flightstats.

    International direct check-in mishandled bag rates per thousand, Sydney and Melbourne airports

    Source: BARA and Unisys Australia.

    BARA detailed the progressive commercial principles in its initial submission that would provide appropriate obligations for all parties and encourage continuous improvement in the delivery of airport services. BARA believes this will not come about through the Productivity Commission’s Draft Report, which instead calls for the Australian Competition and Consumer Commission (ACCC) to revamp the annual airport monitoring report.

    “BARA fails to see how a revamped airport monitoring report will deliver any useful improvement. It will not change the assignment of commercial accountabilities between the airport operators and international airlines, which underpin the problems in airport services we see today.

    “International airlines require appropriate and balanced airport services agreements. Then they could address problems in airport services directly with the airport operators, rather than just be reporting average, poor and highly unacceptable service outcomes to the Productivity Commission and ACCC.

    “Ultimately, international airlines will operate to Australia’s airports to the best of their ability given the quality of airport services on offer. Whether the benefits of superior performance in airport services are delivered for the Australian economy and people will depend on the willingness to achieve them,” Mr Abrams said.