Finance Finance News Samuel: Airports need regulation to stop price gouging

Samuel: Airports need regulation to stop price gouging

The New Daily
Australians are paying too much at airports. Photo: Getty
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Australians are being gouged by under-regulated monopolistic airports abusing their market power, according to former competition watchdog boss Graeme Samuel.

Airlines are demanding the Government regulate airports to bring down costs, and commissioned the former Australian Competition and Consumer Commission chairman to investigate the sector.

“[That is] whether it’s the exorbitant landing and service fees paid by airlines on the passenger’s behalf, their car parking fees, taxi surcharge or the bottle of water they buy in the terminal,” Professor Samuel said.

Consumers have no choice, and neither do airlines, following the Government’s privatisation of the nation’s biggest airports.

“The notion that airlines, and indeed any airport user, can enter into genuine commercial negotiations with a monopoly airport operator in Australia’s cities and regions is clearly nonsense,” Professor Samuel concluded.

An alliance of Qantas, Virgin Australia, Air New Zealand and Rex commissioned Professor Samuel and Frontier Economics to report on the impact airport privatisation has had on pricing as part of a push for more regulation.

The report found airports are now collecting at least 25 per cent more revenue for every passenger than they were 10 years ago, in real terms.

Growing evidence airports gouging airlines, passengers
It appears to add to the weight of evidence that something may need to change.

An ACCC report released last month found Australia’s largest airports have seen their operating profits surge.

At Sydney Airport, profit from aeronautical activities jumped 7.1 per cent last financial year, nearly double that of the next best performing airport.

The ACCC also found aeronautical profits at Sydney, Brisbane, Melbourne and Perth airports rose, on average, at more than double the pace of the increase in passengers.

The airlines’ report blames the gouging on the Productivity Commission’s “current light-handed monitoring regime” and slams the commission’s “belief that just because airports have market power does not mean they will use or abuse it”.

The ACCC’s report came to similar conclusions to its former chairman’s – that the current regime “did not provide an effective constraint on the airports’ market power”.

The campaign by the airlines comes ahead of an inquiry into the regulation of airports by the Productivity Commission.