Airport Monitoring Report 2007-08

In 1997, as a direct result of the privatisation of Australia’s airports, the Australian Competition and Consumer Commission (ACCC) began a review of price regulation of airport services including the fee structure at airport car parks.

Changes to the initial policy were put forward during the productivity commission review, which took place in 2002.  Of particular importance was the placing of a limit on the breadth and stringency of the monitoring.  The changes to the policy were implemented as a means by which to facilitate investment and innovation by the airports.  In 2007 the entire monitoring process was ended.

The Australian Government has published an Aviation Green Paper in December 2008, as a means by which to achieving the development of Australia’s first aviation industry strategic plan.

The Green Paper covers a wide range of issues and themes but specific to our industry is the proposed re-introduction of car park price monitoring at Australia’s five major airports, as well as the costs and profits associated with these airports by the ACCC.  The motivation behind this is to prevent the airport operators from exploiting the travelling public. The Government proposes that this monitoring be approached in the following manner:

  • Continuation of price monitoring of Australia’s five major airports (Sydney, Melbourne, Brisbane, Adelaide and Perth) – to be reviewed in 2012
  • Improvement to the methods of quality of service monitoring
  • Re-introduction of a certain degree of price monitoring at Darwin and Canberra airports
  • The development of a tiered approach to price monitoring depending on the size and market power held by the airport
  • The creation and implementation of a ‘show cause’ mechanism, whereas the airports are required to show cause as to why they should not be subjected to higher levels of scrutiny when there is evidence of abuse of market power.

 

The benefits of the proposed monitoring changes appear to be quite clear – greater transparency, accountability and consistency amongst the operators, reasonable profits for them, dispute resolution procedures and minimum service quality.  The end result will be a fair price paid by the clients at a reasonable rate of return to the investors.  These processes also improve the governance structure of the operators as these will be an external and independent authority balancing profits against charges.

In our opinion, airports should devise a parking strategy that would allow them to justify the rates being charged and future increases in those charges. The strategy should be as objective as possible, by relating parking prices to the cost of alternative travel to/from the airport, current parking prices charged in the CBD (or other commercial centres) and prices charged at other similar facilities.

Price increases that are justified by improvements in the parking offer, and therefore in the level of service, will also require appropriate communication to the public by specific marketing initiatives (including website and ad hoc initiatives). The cost and the mannerof collection of parking fees needs to be taken into consideration, particularly where large numbers of coins are required for change and where use of credit cards is not sufficiently encouraged.

The ACCC issued its Airport Monitoring Report 2007 – 08 on 30th March 2009.

 

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