Regulator knocks back Sydney Airport regional charges

The ACCC has decided to object to a proposal by Sydney Airport to increase charges for the provision of terminal, check-in, passenger security and bag screening, runways and apron parking services to regional airlines by up to 2.9 per cent from 23 October 2010.

"Although Sydney Airport's charges for regional airlines have not increased since 2001, there has been strong growth in demand, particularly in the number of passengers. This has had the effect of increasing Sydney Airport's revenues," ACCC chairman Graeme Samuel said.

"Sydney Airport has not satisfied the ACCC that the costs of providing services to regional airlines have increased to the extent that a price increase is required.

"The ACCC also considered Sydney Airport's claims that the proposed price increases were required to signal efficient use of scarce capacity.

"While the ACCC recognises that this is an important issue, Sydney Airport did not demonstrate the extent of such scarcity or how the proposed prices would lead to more efficient use.

"Taking all this into account, the ACCC objects to the proposed increase in charges," Samuel said.

"It is open to Sydney Airport to re-apply to the ACCC, but the ACCC expects that any new proposal would address the matters the ACCC has set out in its decision."

In response, SACL CEO Russell Balding pointed out that the increase was the first the airport had sought since 2001 - and that the increase was significantly less than the 28.9 per cent CPI increase in those nine years.

"The failure of the regulatory system to deliver a fee increase after 10 years is disappointing and difficult to comprehend, particularly given that the increase sought was so far below the CPI," Balding said in a formal response.

"Adjusted for inflation, regional aeronautical fees at Sydney Airport have actually reduced by 20 per cent since 2001."

Regional Express was quick to express gratitude for what it described as "the proactive and decisive decision of the government in June this year to extend the regulation on price caps...".

"Without this necessary protection, Rex would see itself faced with an annual increase of $3.2 million which would certainly mean the closure of half a dozen marginal regional routes and eventually see regional carriers displaced to Bankstown,"said the airline's GM of network strategy, Warrick Lodge.