Michael Peters

There is perhaps no greater failure of competition policy than access to airports.

The Australian Competition and Consumer Commission’s (ACCC) submission to the Productivity Commission’s inquiry into the economic regulation of airport services states that airports should face tougher rules to discourage excessive parking and other fees.

I can’t help but feel we all pay for this anomaly.

The ACCC has stopped short of suggesting that there should be price caps, however the ACCC has revealed airport charges passed on to passengers make up as much as 20% of the cost of Qantas and Virgin’s cheapest airfares, and even more for budget carriers, and wants to curb the potential for privatised airports to reap excessive profits through market strength.  The ACCC is concerned that some airports may have used their market power to achieve monopoly profits in services provided to airlines and in car parking.

There is little doubt that airports have taken advantage of their market power to the detriment of key industries such as tourism and couriers, as well as everyone who flies for business. The extra costs the airports impose impacts on the entire economy.

The ACCC says the threat of arbitration would encourage fairer commercial negotiations between airports and airlines when determining charges, but it has not pushed for a return of price caps fearing tourism could be harmed.

That’s fair enough, however this form of profiteering is a burden to the economy.

It restricts productivity and distorts the market. In particular the cost to the community is significant. For many years successive governments and the regulator have attempted to do something about our airports – just as they tried to do with Telstra. The answer is the application of sound public policy and to vigorously pursue competition law enforcement to ensure access to key infrastructure.

I want to see a total reform of this area. Rod Sims – the new Chairman of the ACCC – and the ACCC as a whole is in a unique position to finally deal with the elephant in the room that is passengers using the nation’s airports.

Michael Peters is a Lecturer in Business Law and Taxation at the Australian School of Business.