The ACCC Says Flying Costs More, But At Least The Service Is ‘Good’

The ACCC Says Flying Costs More, But At Least The Service Is ‘Good’
Image: ACCC

The Australian Competition and Consumer Commission’s annual Airport Monitoring Report has found that Sydney, Melbourne, Perth, and Brisbane airports all received an overall weighted rating of “good” for their quality of service in 2015-16.

The report also found that the airports are collecting substantially more revenue per passenger than a decade ago.

The report, Airport monitoring report 2015-16, found that both Brisbane and Perth airports were rated equal highest of the monitored airports within the “good” category. These overall ratings are drawn from survey results (both airlines and passengers) and objective indicators.

“It is encouraging to see that all four airports made it into the ‘good’ category for overall quality of service ratings this year, in addition to a second straight year of notable improvement by Perth Airport,” ACCC Chairman Rod Sims said.

“However, there is still room for the airports to better satisfy both passengers and airlines.”

The ACCC estimates that over the past decade, these airports have collected $1.57 billion more in revenue from airlines than they would otherwise have collected if average prices were held constant in real terms. Despite these much higher revenues per passenger, ratings of service quality are not materially different from those seen a decade ago.

Car parking profit margins also continue to remain high with Sydney airport recording a car parking profit margin of 73.1 cents per dollar of revenue.

“The returns that the airports get on car parking show that they do not face significant competitive constraints when setting prices,” Mr Sims said.

However, the ACCC found that more consumers are taking advantage of substantial discounts when booking online for car parking, particularly for long-term parking.

“Booking online can deliver the best value car parking deals. In comparison, those who do not pre-book must pay drive-up prices which can be double that of online prices,” Mr Sims said.

The report also found that a combination of higher access charges and passenger growth had grown airport revenues from landside operators such as taxis, buses and off-airport carpark operators.

“Airports set the terms and prices to landside areas. This means that they are in a position to impede competition to on-airport car parking by increasing access costs for alternatives such as off-airport car park operators,” Mr Sims said.

Strong international passenger numbers drove overall airport passenger growth by 3.4 per cent. More than a third of the growth in international visitors was due to passenger growth from China.

The report also noted developments associated with the proposed Western Sydney Airport. The Sydney Airport ownership group is currently considering whether it will take up the right to build and operate the proposed airport. Should the ownership group decline the government’s terms and conditions, the government can offer the opportunity to other private companies.

“A second international airport competing with Sydney Airport will yield significant benefits to both consumers and airlines,” Mr Sims said. “On the other hand, a common owner of the two airports would have an incentive to restrict investment and delay the new airport in order to maximise returns from its existing assets.”

If Sydney Airport does not build and operate the new airport, the Government can build the airport and sell the assets once it is already established.