ACCC suggests airport regulation, says flyers pay up to $1.6b in extra fees due to privatisations

Airlines and their passengers have paid up to $1.6 billion too much for airport access over the past decade due to a textbook example of how not to privatise monopoly assets, the competition regulator said.

The Australian Competition and Consumer Commission's (ACCC) latest report into Australia's four biggest airports - Sydney, Melbourne, Brisbane and Perth - found that profit margins eased slightly for three of the operators last financial year.

However, Brisbane Airport's profit margin increased to 44.9 per cent, and Sydney Airport's 46.7 per cent profit margin would be amongst the highest in corporate Australia.

The airports have dramatically increased revenue per passenger over the past decade, with Brisbane charges up by two-thirds, Perth 43 per cent, Melbourne almost a third and Sydney up 16 per cent.

However, Sydney's charges remain the highest with $17.27 in revenue per passenger.

"The airlines are concerned that they keep getting higher charges from the airports and, of course, they've got to pass that on to consumers," ACCC chairman Rod Sims told RN Breakfast.

Beyond charges for airlines' use of the tarmac and terminal, Australia's airports are making a killing out of parking.

Mr Sims described the airports' car parking profit margins as "quite amazing", and said they get away with such high charges because they also slug taxis, hire cars and shuttle buses with large, and rising, fees to access the airport for drop-offs and pick-ups.

"Their access charges have gone up quite a lot, so the airports don't face much competition," he said.

"It's a great position to be in where you can have this near monopoly car parking and also make it more difficult for your competitors."

ACCC calls for power to regulate airport charges

Mr Sims said the ACCC would like to be given some specific regulatory powers over airports to limit price increases, but so far it has been denied.

"They're completely unregulated. Various governments over time have set them up that way. We've suggested a bit of regulation over time but governments have said they'd rather they stay unregulated," Mr Sims observed.

"The airlines certainly would support us having some role here, whether it's a negotiate/arbitrate role on, whether it's some regulatory role on car parking fees.

"Whenever you have a monopoly that is providing services to average consumers, that have to pay directly through their car parking or indirectly through their airline ticket, I think people do get concerned when they make very high margins."

Mr Sims said such poorly handled privatisations, where governments seek to maximise the sale price by allowing monopolies to operate without regulatory oversight, are a key factor behind community opposition to public asset sales.

"They privatised them and simultaneously took the regulations off," he said.

"So, of course, don't be surprised when people see privatisation and link it to higher prices because they've seen a lot of it happen."

Mr Sims said it was also undoubtedly a mistake for the Howard Government to have given Sydney Airport a first right of refusal to build and own Sydney's second airport at Badgery's Creek, "in order to inflate how much money they could sell Sydney Airport for".

"It's fundamentally anti-competitive, and let's hope it doesn't get taken up and we do get an alternative owner," he argued.

Mr Sims said it would be a "great" outcome if the Federal Government built Badgery's Creek, and potentially sold it off to another private owner later.

"Not only would you get the benefits of competition between Badgery's Creek and Sydney Airport, but if you have a common owner of the two airports, that common owner will have an incentive to restrict investment at Badgery's Creek and delay Badgery's Creek so that it can maximise its profits at Sydney Airport."

- By business reporter Michael Janda