ACCC maintains attack on airport market power

The Australian competition watchdog has stepped up its campaign to have major airports more effectively regulated.

This follows what was an unexpectedly benign view of airports' market power included in a recent Productivity Commission report.

The ACCC is proposing that the existing monitoring regime be replaced by regulations that encourage true commercial negotiations without the ability of the airports to exercise their market power.

“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,” ACCC Chairman Rod Sims said.

The ACCC has monitored the performance of Australian airports since 1997-98; and annually reports to the Australian Government on the prices and quality of services provided by Adelaide, Brisbane, Melbourne, Perth and Sydney airports.

Monitoring covers services provided to airlines as well as landside services such as car parking.

“The ACCC sees the use of market power contributing to higher prices or lowerquality services. This not only directly affects airlines and passengers that use theairports, but can have flow-on effects in related markets such as tourism,” Mr Sims said.

“In the ACCC’s view, more monitoring and inquiries will not constrain the airports’ monopoly behaviour. An effective permanent solution is needed.”

The ACCC’s proposal is to encourage true commercial negotiations by having ACCC arbitration as a fallback for services provided to airlines.

For landside services, the ACCC proposes that airports with significant market power be required to submit court-enforceable undertakings that set minimum terms and conditions of access, giving parties certainty about the access conditions applying to the airports’ infrastructure.

Industry analysts appear to be of a view that the strident calls from the ACCC are likely to fall on deaf ears at the Productivity Commission. Indeed, the ACCC's vocal position may even solidify the PC's perspective.

This is certain to be a discussion point at next month's Australian Airports Association convention in Brisbane.