[Peetwo]

McDo'Naut does naut on airports vs airlines war - Part II

Via the Oz today:

Airports earn too much: airlines
ROBYN IRONSIDE
Australia’s major airlines say airports have become too profitable since privatisation due to the light-handed monitoring regime.

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Australia’s airports have become too profitable since deregulation: airlines

Australia’s major airlines say airports have become too profitable since privatisation as a result of light-handed monitoring, and more regulation would provide significant cost benefits for consumers.

In a detailed submission to the Productivity Commission inquiry into economic regulation of airports, Airlines for Australia and New Zealand (A4ANZ), representing Qantas, Virgin Australia, Regional Express and Air New Zealand, said the existing regulatory system was “powerless to curtail the mono­poly power of airports”.

The PC inquiry was established following concerns raised by Australian Competition & Consumer Commission chairman Rod Sims about the lack of constraint on airports’ market power.

The ACCC plays a price-monitoring role for the four major airports, publishing an annual report on their performance in the areas of aeronautical charges, retail tenancies, parking and ground transport. But A4ANZ chairman Graeme Samuel said the existing regime was failing to facilitate commercial negotiations between airports and their customers.

“This should not come as a surprise to anyone, as monopolists will overcharge unless faced with a credible threat of regulation,” said Mr Samuel, a former ACCC chairman. “A4ANZ’s position is supported by all the expert advice we received that the current system is not sustainable. It lacks a credible threat.”

He said financial modelling by Frontier Economics had found there could be a cost benefit of $18 billion from more effective regulation.

Among the injustices highlighted in the submission was the price of food and pharmaceuticals at Sydney, Melbourne, Brisbane and Perth airports, which tended to be about 25 per cent higher than at shops a few kilometres away.

The submission also noted the 25 per cent per passenger increase in aeronautical revenue at the four major airports in the past decade.

A4ANZ chief executive Alison Roberts said something had to change if consumers were to be shielded from the impact of what was ahead. “While airlines have been able to keep downward pressure on airfares over the past decade, globally, fares are expected to rise next year,” Dr Roberts said.

The airlines’ call for greater airport regulation was not shared by Infrastructure Partnerships Australia, whose submission said any adverse change to the current “light-handed” monitoring could distort investment incentives.

The inquiry is expected to report next year.

Meanwhile in Can'tberra McDo'Naut does naut on anything aviation related...

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& today (11/09/18) in the Oz:

Airports defend parking prices
ROBYN IRONSIDE
Sydney, Melbourne, Brisbane and Perth airports want the consumer watchdog to stop monitoring the cost of carparking.

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Airports defend parking prices, insist light oversight is working

Airports Association wants the consumer watchdog to stop monitoring the cost of car-parking at Sydney, Melbourne, Brisbane and Perth airports because of the regu­latory burden involved.

In a 110-page submission to the Productivity Commission inquiry into the economic regulation of airports, the AAA argued that overall the current light-handed monitoring regime was working well.

The submission said there was no evidence of market power abuse by major airports, and calls to regulate the pricing activities of small regional ­airports were a “dubious ­proposition”.

The association said it did not believe there was a basis for continuing to monitor the price of ground access and car-parking because there was no evidence of excessive profit-making.

The last airport monitoring report by the Australian Competition & Consumer Commission found profit margins for airport car-parking ranged from 52.4 per cent in Perth to 71.9 per cent in Sydney.

In the first six months of this year, Sydney Airport recorded a 2.1 per cent increase in car-parking revenue, to $78.6 million.

Drive-up parking costs at Sydney, Melbourne, Brisbane and Perth airports range from $19.80 to $29 for one to two hours, and from $54 to $102 for up to 48 hours.

The AAA submission said car-parking prices had generally remained stable, with “small ­adjustments” made to reflect changing patterns of demand and congestion.

“With a couple of exceptions, car-parking prices at the airports have increased by less over the last five years than the proportional increase in the value of the land in proximity to the car parks,” the submission said.

Consumer Action Law Centre policy director Denise Boyd said providing the ACCC with information about car-parking should not be a regulatory burden if airports were doing the right thing.

“I would say there’s a general view that the cost of airport car-parking virtually amounts to price gouging and that’s why we need regulatory oversight to keep this in check,” she said.

MTF...P2